Supplementary file 1_Rethinking overseas expansion: climate risk and Chinese corporations’ cross-border mergers and acquisitions.docx

The results show that higher climate risk is associated with a significantly lower probability of initiating cross-border M&A. This finding remains robust across alternative measures, clustering levels, model specifications, placebo tests, lagged-variable analyses, an instrumental-variable strategy, and an event study based on an exogenous climate shock.

Mechanism analyses provide evidence consistent with two channels: climate risk lowers firm value and reallocates financial and managerial resources toward green investment, thereby reducing the resources available for foreign acquisitions. The negative relationship is primarily driven by chronic physical risk and transition risk, whereas acute physical risk becomes significant only among climate-sensitive firms. The relationship is stronger among firms outside high-carbon industries and substantially weaker for green cross-border M&A, indicating that green acquisitions are relatively more resilient to climate-related pressures.