Firm biodiversity risk, climate vulnerabilities, and bankruptcy risk

Adamolekun, Gbenga

Abstract

This study examines the relationship between firms’ biodiversity risk, climate susceptibility, and bankruptcy risk. The findings indicate that firm exposure to biodiversity risk increases the likelihood of financial distress. Furthermore, we document that firms’ susceptibility to climate risk increases the likelihood of bankruptcy risk. We also demonstrate that financial constraints, growth opportunities, and membership in carbon-intensive industries can worsen or alleviate the bankruptcy implications of climate-related risk. Firms’ continent of operation is also an important consideration. The findings imply that severe climate-related vulnerabilities and firm biodiversity risk have profound consequences for corporate outcomes. This study sheds more light on how corporate financial outlook is impacted by ecological degradation and climate-related vulnerabilities.

Citation

Adamolekun, G. (2024). Firm biodiversity risk, climate vulnerabilities, and bankruptcy risk. Journal of International Financial Markets, Institutions and Money, 97, Article 102075. https://doi.org/10.1016/j.intfin.2024.102075

• Journal Article Type: Article
• Acceptance Date: Oct 25, 2024
• Online Publication Date: Nov 4, 2024
• Publication Date: 2024-12
• Deposit Date: Nov 4, 2024
• Publicly Available Date: Nov 4, 2024
• Print ISSN: 1042-4431
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 97
• Article Number: 102075
• DOI: https://doi.org/10.1016/j.intfin.2024.102075
• Keywords: Climate change, Corporate climate vulnerabilities, Firm climate exposure, Corporate carbon emissions, Bankruptcy risk, Financial distress