Forecasting company performance from space : Exploring the usability of the satellite based TROPOMI NO2 tropospheric column for company performance prediction.

Abstract

Acknowledging the growing traction of non-traditional datasets in financial analysis, this study explores the potential of the satellite based TROPOMI NO2 tropospheric column as a predictive tool for assessing the financial performance and productivity of mining companies. The focus of this analysis lies on the investigation of the correlation between the TROPOMI NO2 tropospheric column and firms’ financial performance measured as sales, net income, and ROA. Additionally, the relationship of the TROPOMI NO2 tropospheric column and firm productivity, measured as mine output is analysed. Utilising the TROPOMI NO2 tropospheric column of the European Space Agency’s Copernicus program, the correlation between NO2 concentration and firm performance is analysed employing univariate and multivariate regression. The results indicate a significant positive correlation between NO2 levels and sales, that is particularly pronounced among smaller firms, newly established firms, and those with less mines. For instance, the findings of the main analysis suggest that a 1% increase in NO2 concentration is associated with a 0.052% increase in sales. Conversely, the impact on net income and ROA is inconclusive, showing inconsistency across different analyses. The results of this thesis must be interpreted with caution due to data limitations and call for further investigation. Nevertheless, the findings uncover the potential value of satellite based NO2 data as a supplementary data source to enhance financial analysis, which is especially relevant for firms that are not publicly traded.