How do executives respond to biodiversity risk? Evidence from opportunistic stock selling

Abstract

Biodiversity loss is increasingly recognized as a critical environmental challenge with significant implications for corporate governance. Using data from Chinese A-share listed companies from 2010 to 2022, we explore the impact of biodiversity risk on executive opportunistic stock selling. Our results show that biodiversity risk, particularly biodiversity regulation risk, reduces executive opportunistic stock selling, and this finding is robust to the Heckman two-step model and instrumental variable analysis. Mechanism analysis suggests that biodiversity risk influences executive behavior through firm value and the divestment of long-term institutional investors, while heterogeneity analysis indicates that the effects are more pronounced in firms with more institutional investor site visits, stricter environmental regulations and lower media attention. We supplement the biodiversity risk literature and provide a fresh perspective for understanding executive decision-making.