Nowcasting Firms’ Operating Activities from Satellite Data on Thermal Infrared Radiation

Yuan Xue, Bohui Zhang, and Xiaofeng Zhao

♦ Practical real-world activities consume energy and emit thermal infrared radiation (TIR). On the basis of this physical fact, we develop a measure for directly gauging firms’ operating activities. Specifically, we exploit satellite data to identify the TIR emitted by firms’ factories during their production and operations and to examine whether firms’ TIR is informative about their future performance. Using a large dataset of the factories of publicly listed firms, we find that the change in firms’ TIR is significantly and positively related to their future sales growth and profitability. The effects increase with firms’ energy efficiency and productivity.

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