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Threat or opportunity: Biodiversity risk and corporate investment

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  • Deng, Xiaomeng
  • Zhang, Pengwei
  • Wu, You

Abstract

We investigate how biodiversity risk influences corporate investment. Using text-based measures of firm-level exposure, we find that higher biodiversity risk is associated with significantly greater investment. This effect is more pronounced in highly competitive industries, consistent with the strategic growth option view: when first-mover advantages matter, firms may respond to biodiversity risk by investing early. The effect is amplified for firms facing volatile external regulatory environment, but attenuated in firms with more managerial myopia. The results are robust across alternative specifications and endogeneity checks, highlighting biodiversity risk as an economically meaningful and independent driver of corporate investment decisions.

Suggested Citation

  • Deng, Xiaomeng & Zhang, Pengwei & Wu, You, 2026. "Threat or opportunity: Biodiversity risk and corporate investment," Finance Research Letters, Elsevier, vol. 89(C).
    • Handle: RePEc:eee:finlet:v:89:y:2026:i:c:s154461232502015x
    DOI: 10.1016/j.frl.2025.108761
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