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We examine the impact of takeover vulnerability on firm‐specific climate change exposure using sophisticated text‐based metrics generated from machine learning algorithms and a measure of takeover vulnerability primarily derived from state takeover laws. Based on a large sample of more than 28,000 observations, our findings show that firms more vulnerable to hostile takeovers have higher exposure to physical climate risks, as managers focus on short‐term financial performance over long‐term risk mitigation. These firms also reduce regulatory risk exposure by adopting stringent compliance measures and improving environmental practices to avoid penalties and attract investors. However, they are less likely to invest in new business opportunities related to climate change, prioritizing stability over potential gains in new business opportunities. Propensity score matching and entropy balancing confirm the robustness of these results. Our research provides insights into how hostile takeover threats influence corporate environmental strategies. [ABSTRACT FROM AUTHOR]

Innovation is one of the crucial drivers that stimulates firms toward Sustainable Development Goals (SDGs), but successful innovation comes with high uncertainty since innovation involves large capital expenditures and complex processes. The characteristics of the board of directors (BOD) influence their perceptions, preferences, and interpretation which affect their decision‐making and firm outcomes. This study emphasizes the relationship between female directors and corporate innovation. We use text‐based measures of innovation (TBI) to capture innovation investment. The fixed‐effects regression results suggest that female directors reduce the innovation investment level of the firm. The empirical results are tested for robustness using a two‐stage least square instrumental variables (2SLS‐IV) analysis and a two‐step system generalized method of moment (GMM) panel estimator. The latter supports the initial results and aligns with the Upper Echelons Theory (UET), where the characteristics of the BOD determine the organizational outcomes. The findings conclude that female directors influence the decision outcomes of the BOD toward risk‐neutral, which lowers innovation investments while maintaining the firm profitability. [ABSTRACT FROM AUTHOR]

Sustainable development is one of the prominent goals promoted by the United Nations (UN). To achieve Sustainable Development Goals, the UN identifies innovation as one of the important elements. Motivated by this, we explore how board size affects firm's innovation and find a negative relation between board size and firm's innovation. Our analyses including ordinary least squares (OLS) regressions, instrumental variable, propensity score matching, and generalized method of moment (GMM) dynamic panel data estimation show that our results are robust and are not driven by unobserved heterogeneity. Our findings are consistent with stewardship theory where a smaller board leads to more corporate innovation, which eventually leads to sustainable firms. [ABSTRACT FROM AUTHOR]