Climate Risk and Financial Performance Amid Crisis: A Sectoral Comparison of Listed Firms in Ghana

ABSTRACT This study examines the impact of climate risk (CLR) on the financial performance (FP) of listed firms, listed banking and insurance (BKN) firms, as well as manufacturing firms in Ghana, amid crisis periods. Using a dataset of 16 listed firms in Ghana, comprising 7 BKN firms and 9 manufacturing firms, from 2010 to 2019, the study employed the robust ordinary least squares regression to address heteroscedasticity and autocorrelation and conducted robustness tests to validate its findings. The study found that amid the banking crisis, CLR positively impacts the return on equity (ROE) and earnings per share (EPS) of BKN Ghanaian listed firms. It also positively impacts the ROE of Ghanaian‐listed manufacturing firms, but it has no significant impact on their EPS. In general, CLR positively impacts Ghanaian listed firms' ROE, but does not affect their EPS. Furthermore, the Paris Agreement did not have an impact on these relationships. CLR having a mixed impact on Ghanaian listed firms' FP emphasizes the need for them to strengthen the integration of CLR mitigation in their decision‐making and financial risk assessments and the need for support in addressing the challenges in the implementation of the Paris Agreement. This study pioneers an investigation into the impact of CLR on the FP of Ghanaian listed firms, comparing banking/insurance and manufacturing firms, amidst the banking crisis. It also explores the PAG's implications from a Ghanaian perspective.