Biodiversity risk and corporate debt maturity

Abstract

This paper investigates how biodiversity risks influence corporate debt maturity choices. Utilizing a sample of publicly listed firms in the United States between 2000 and 2023, our findings suggest that exposure to biodiversity risks increases the likelihood that firms will reduce their reliance on short-term borrowing. As firms face significant difficulties in constrained natural resources for their operations under biodiversity risks, they tend to avoid adding inherent risks embedded in short-term debt. However, our paper also finds that larger firm size, diversification across offshoring input countries, and government contracting can help mitigate the adverse impact of biodiversity risks on short-term debt maturities. Our study provides valuable insights for both firms and governments to develop strategies and support mechanisms to address the challenges caused by biodiversity risks.