Paper Number
ECIS2026-2185
Paper Type
CRP
Abstract
Climate change introduces transition and physical risks that increasingly shape capital market valuations. Although enterprise systems underpin organizational coordination, IS research has not examined whether ES configuration choices influence how investors interpret climate-related disclosures. This study investigates how Enterprise Systems Diversity conditions the valuation effects of Climate Exposure Risk (CER). Using a panel of Fortune 500 firms (2014–2018), we combine CER measures derived from earnings call transcripts with firm-level ES vendor data and market valuation indicators. ES Diversity is captured using an entropy-based index reflecting the dispersion of ES vendors across sites. The econometric analysis reveals a consistent pattern: diversity amplifies the negative valuation effects of transition-related risks and chronic physical risks, but mitigates the penalty associated with acute physical risks. These findings position ES Diversity as a climate-sensitive configuration choice and extend IS theory on enterprise systems, risk, and valuation.
Recommended Citation
Sonpatki, Ria; Kathuria, Abhishek; and Karhade, Prasanna, "Climate Risks And Firm Valuation: The Moderating Role Of Enterprise Systems Diversity" (2026). ECIS 2026 Proceedings. 13.
https://aisel.aisnet.org/ecis2026/is_resil/isresilience/13
Climate Risks And Firm Valuation: The Moderating Role Of Enterprise Systems Diversity
Climate change introduces transition and physical risks that increasingly shape capital market valuations. Although enterprise systems underpin organizational coordination, IS research has not examined whether ES configuration choices influence how investors interpret climate-related disclosures. This study investigates how Enterprise Systems Diversity conditions the valuation effects of Climate Exposure Risk (CER). Using a panel of Fortune 500 firms (2014–2018), we combine CER measures derived from earnings call transcripts with firm-level ES vendor data and market valuation indicators. ES Diversity is captured using an entropy-based index reflecting the dispersion of ES vendors across sites. The econometric analysis reveals a consistent pattern: diversity amplifies the negative valuation effects of transition-related risks and chronic physical risks, but mitigates the penalty associated with acute physical risks. These findings position ES Diversity as a climate-sensitive configuration choice and extend IS theory on enterprise systems, risk, and valuation.