Dividend payouts and biodiversity risk — Chinese evidence

Abstract

Across 25979 firm years, from 2007 to 2022, we investigate how Chinese firms exposed to biodiversity risk adjust corporate dividend payouts. The results show that biodiversity risk exposure significantly lowers the level of corporate dividend payouts, mainly through two channels — aggravating financing difficulties and promoting resource reallocation. Further, the negative impact of biodiversity risk on corporate dividend payouts is more prominent in firms with weaker political connections, stronger external supervision, and poorer internal governance. Our findings are consistent across several robustness checks. Overall, our work sheds light on the influence of the emerging challenge of biodiversity risk on corporate dividend payouts.

Keywords: Biodiversity risk, China, Dividend payouts, Financing difficulties, Resource reallocation