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Biodiversity risk and firm efficiency

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Listed:
  • Li, Yulin
  • Liu, Xiaohui
  • Canil, Jean
  • Cheong, Chee Seng

Abstract

This study examines the impact of biodiversity risk exposure on firm efficiency. Analyzing 23,750 firm-year observations from 2001 to 2020, we identify a significant negative relationship between biodiversity risk and firm efficiency. Our research indicates that increased external financing needs and higher capital costs, driven by biodiversity risk, are key channels contributing to reduced firm efficiency. Firms with higher biodiversity risk exposure demonstrate lower efficiency, especially those with greater idiosyncratic volatility. These findings highlight the economic costs and operational challenges posed by biodiversity risk, offering new insights into its direct impact on firm efficiency.

Suggested Citation

  • Li, Yulin & Liu, Xiaohui & Canil, Jean & Cheong, Chee Seng, 2025. "Biodiversity risk and firm efficiency," Finance Research Letters, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:finlet:v:71:y:2025:i:c:s1544612324014430
    DOI: 10.1016/j.frl.2024.106414
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Gan, Yufei, 2025. "When green claims turn brown: The Impact of corporate greenwashing on biodiversity risk in China," The Quarterly Review of Economics and Finance, Elsevier, vol. 104(C).
    2. Yin, Libo & Zhu, Xiaoye & Li, Jingtian, 2025. "Does exposure to biodiversity risk drive firms’ digital transformation?," Finance Research Letters, Elsevier, vol. 82(C).
    3. Cosma, Simona & Cosma, Stefano & Pennetta, Daniela & Rimo, Giuseppe, 2025. "Does biodiversity matter for firm value?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 105(C).
    4. Deng, Xiaomeng & Zhang, Pengwei & Wu, You, 2026. "Threat or opportunity: Biodiversity risk and corporate investment," Finance Research Letters, Elsevier, vol. 89(C).
    5. Tran, Thanh Tat & Hoang, Khanh & Ngo, Thanh & Nguyen, Thang Xuan & Tran, Hien Thi Thu, 2025. "How does biodiversity risk exposure affect corporate regulatory intensity?," Finance Research Letters, Elsevier, vol. 86(PB).
    6. Di Tommaso, Caterina & Foglia, Matteo & Pacelli, Vincenzo, 2025. "The impact of biodiversity score on the European firm’s performance," International Review of Financial Analysis, Elsevier, vol. 106(C).
    7. Wang, Gang, 2025. "How does biodiversity risk affect digital transformation? Evidence from China’s manufacturing enterprises," Finance Research Letters, Elsevier, vol. 85(PD).
    8. Pi, Tianlei & Jiao, Linke & Zhou, Yuhan & Shi, Jin, 2025. "Can biodiversity risk improve firm ESG performance? Empirical evidence from China," Finance Research Letters, Elsevier, vol. 76(C).
    9. Duong, Kiet Tuan & Nguyen, Thong Trung & Tram, Huong Thi Xuan, 2025. "Biodiversity risk and corporate debt maturity," International Review of Financial Analysis, Elsevier, vol. 107(C).
    10. Yang, Guang & Li, Yu, 2025. "Research on biodiversity risk and corporate short-term debt for long-term use under disclosure regulation," Finance Research Letters, Elsevier, vol. 77(C).
    11. Li, Jun & Jin, Yihang & Zhou, Peng, 2025. "Do banks price firms' biodiversity risk? Evidence from the Kunming declaration," International Review of Financial Analysis, Elsevier, vol. 106(C).
    12. Liu, Jinglin & Xing, Xiaoyun & Chen, Guorong & Zhang, Yang, 2026. "Biodiversity risk as a financial threat: Evidence from AFHF sectors using QVAR networks," Finance Research Letters, Elsevier, vol. 87(C).
    13. Khan, Nasir & Lucey, Brian, 2026. "Biodiversity risk, corporate governance, and firm performance: empirical evidence from China," Finance Research Letters, Elsevier, vol. 87(C).
    14. Pi, Tianlei & Jiao, Linke & Zhou, Yuhan & Shi, Jin, 2026. "Biodiversity risk and corporate greenwashing: Evidence from China," Research in International Business and Finance, Elsevier, vol. 83(C).
    15. Treepongkaruna, Sirimon & Suttipun, Muttanachai & Padungsaksawasdi, Chaiyuth, 2026. "Biodiversity reporting and Staggered Board," Finance Research Letters, Elsevier, vol. 88(C).

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