Climate Risk Exposure and Corporate Internationalisation: Evidence From China

ABSTRACT This paper focuses on assessing how climate risk exposure influences corporate strategic decisions, especially the internationalisation strategy. Drawing upon prior studies, we employ textual analysis in this paper to measure firm‐level climate risk exposure. Empirical analyses reveal a negative impact of climate risk exposure on firms' internationalisation. After conducting robustness tests, the negative relationship between climate risk exposure and internationalisation persists. Specifically, the primary channels identified are the deterioration of the financing capacity and reduced risk‐taking propensity. In addition, this relationship is more significant among non‐state‐owned firms, firms with weaker industry competition, and firms with lower ESG scores.