Climate effects on the diversification strategy of export firms: Evidence from China

show that after controlling for this spillover effect, the study’s basic conclusion remains unchanged. Finally, we turn our attention to the potential for bidirectional causality. In the time frame of our study (annual temperature distribution), temperature changes are primarily driven by natural factors and exhibit random fluctuations. In the existing literature, temperature is typi- cally treated as an exogenous variable (Dell et al., 2014) [37]. However, caution is warranted regarding the possibility of unobservable factors that simultaneously affect both temperature and firm behavior, such as certain government environmental policies. To further address the impact of unobservable factors, we employ a placebo test by randomly shuffling the core explanatory variable 100 times and observing whether the temperature variable continues to significantly influence firms’ export decisions. A significant result would indicate the presence of unobservable factors, while an insignificant result would indicate the robustness of our con- clusions. We run regressions after shuffling the variables for temperatures �28˚C, 23~28˚C, <-7˚C, and -7~-2˚C, respectively, and examine the distribution of the regression coefficients, as shown in Fig 2. The results show that after shuffling, the regression coefficients for both high and low temperatures are distributed around zero and are no longer significant, which is Fig 2. Placebo test. Fig 2 displays the research results of the four groups, which respectively illustrate the distribution of regression coefficients resulting from

100 random permutations for variables �28˚C, 23~28˚C, <-7˚C, and -7~-2˚C. https://doi.org/10.1371/journal.pone.0308391.g002 PLOS ONE Climate effects on the diversification strategy of export firms PLOS ONE | https://doi.org/10.1371/journal.pone.0308391 August 16, 2024 11 / 28