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<p>The study examines the impact of biodiversity risk on default probability. The study shows that biodiversity risk increases the likelihood of default. The impacts are significant for firms with lower access to credit and cash reserves. Firms with leverage jumps to meet operating needs exhibit significantly higher 5-year-ahead default risk. As firms reserve sufficient liquidity, leverage jumps decrease default risk. Local risk climate factors moderate the impact of biodiversity on default risk. Treated firms that are prone to transitional and physical risk factors experience a significantly increased default probability. There is a bright side for firms with closer attention from management boards and analysts to climate change exposure. Local climate action maintains a firm’s growth prospects through the mitigated effects of biodiversity risk on default probability. Given the increasing awareness of stakeholders, the empirical findings validate hypothesized theoretical predictions on related risk factors and corporate behaviors, along with potential mechanisms that remain for future studies.</p>

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Biodiversity risk and corporate default probability

  • 期刊论文

  • 发表日期：

    2026年4月24日

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  • Hai Hong Trinh

摘要

The study examines the impact of biodiversity risk on default probability. The study shows that biodiversity risk increases the likelihood of default. The impacts are significant for firms with lower access to credit and cash reserves. Firms with leverage jumps to meet operating needs exhibit significantly higher 5-year-ahead default risk. As firms reserve sufficient liquidity, leverage jumps decrease default risk. Local risk climate factors moderate the impact of biodiversity on default risk. Treated firms that are prone to transitional and physical risk factors experience a significantly increased default probability. There is a bright side for firms with closer attention from management boards and analysts to climate change exposure. Local climate action maintains a firm’s growth prospects through the mitigated effects of biodiversity risk on default probability. Given the increasing awareness of stakeholders, the empirical findings validate hypothesized theoretical predictions on related risk factors and corporate behaviors, along with potential mechanisms that remain for future studies.