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HomePaperBiodiversity Management and Stock Price Crash Risk

Biodiversity Management and Stock Price Crash Risk

26 May 2023
Authors: Alexander Bassen (University of Hamburg), Daniel Buchholz (University of Hamburg), Kerstin Lopatta (University of Hamburg), Anna Rudolf (University of Hamburg)
Presenter: Anna Rudolf (University of Hamburg)

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.

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