Abstract: This study examines the relationship between corporate biodiversity management and financial risk. While the increasing loss of biodiversity and ecosystem services is seen as an important risk factor on a societal level, the financial consequences of these risks on a company level have thus far been neglected by empirical financial research. We posit that strong corporate actions towards preserving biodiversity reduces firms’ financial risks. Using a global sample and novel data on firm’s biodiversity management, our results show that companies with stronger structures, implementations, and actions on biodiversity management see a decline in stock price crash risk. In an additional analysis, we focus on environmental inspections as a possible way through which negative information on biodiversity management is released. Using a subsample of North American firms, we find that firms which see an inspection of their facilities see an increase in their stock price crash risk.
