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Biodiversity Risk Disclosures and Stock Price Crash Risk

Author

Listed:
  • NING, Donglai
  • YASUDA, Yukihiro

Abstract

This study investigates whether biodiversity risk disclosures reduce stock price crash risk, exploiting the Taskforce on Nature-related Financial Disclosures’ (TNFD) early adopter announcement as a quasi-natural experiment. Using a difference-in-differences framework, we find that TNFD adoption significantly reduces crash risk among Japanese firms. Our findings highlight biodiversity risk disclosures’ unique and complementary role, underscoring their importance in enhancing market transparency and mitigating downside risk.

Suggested Citation

  • NING, Donglai & YASUDA, Yukihiro, 2025. "Biodiversity Risk Disclosures and Stock Price Crash Risk," Working Paper Series G-1-28, Hitotsubashi University Center for Financial Research.
    • Handle: RePEc:hit:hcfrwp:g-1-28
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    File URL: https://hit-u.repo.nii.ac.jp/record/2060898/files/070hcfrWP_1_028.pdf
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    References listed on IDEAS

    as
    1. Harrison Hong & Jeremy C. Stein, 2003. "Differences of Opinion, Short-Sales Constraints, and Market Crashes," The Review of Financial Studies, Society for Financial Studies, vol. 16(2), pages 487-525.
    2. Adamolekun, Gbenga, 2024. "Firm biodiversity risk, climate vulnerabilities, and bankruptcy risk," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 97(C).
    3. Chansog (Francis) Kim & Ke Wang & Liandong Zhang, 2019. "Readability of 10‐K Reports and Stock Price Crash Risk," Contemporary Accounting Research, John Wiley & Sons, vol. 36(2), pages 1184-1216, June.
    4. Kim, Jeong-Bon & Li, Leye & Lu, Louise Yi & Yu, Yangxin, 2016. "Financial statement comparability and expected crash risk," Journal of Accounting and Economics, Elsevier, vol. 61(2), pages 294-312.
    5. Ma, Feng & Wu, Hanlin & Zeng, Qing, 2024. "Biodiversity and stock returns," International Review of Financial Analysis, Elsevier, vol. 95(PA).
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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