Working in Progress

[1] Biodiversity Risk, Firm Performance, and Market Mispricing, with Yujun Huang, Anna Créti and María Eugenia Sanin

Combining new data on biodiversity-capacity and biodiversity-footprint with firm fundamentals, we conduct a causal analysis of the impact of biodiversity physical risk on firms' profitability and stock returns. With this purpose, we build a biodiversity index for 35 countries and use a time series model to capture its variation over time. We show that such time trend estimation can be aggregated as risk exposure and can significantly forecast establishment-level profitability. We then show that the market underprices biodiversity physical risk, which is due to the insufficient analysis of related information and its impact on the firm-level future cash flow. We also document disparities of risk exposure across firms and sectors, and our results are consistent with previous findings in terms of climate physical risk. 

Seminar/Conference Participants at: University Paris Dauphine (LED-a), EDHEC Business School, University of Edinburgh, CREST, Banque de France, The 21th Corporate Finance Days, The EUROFIDAI-ESSEC Paris December Finance Meeting (2024), Asian Finance Association (AsianFA) Annual Meeting (2025). 

[2] Indebted Shale Firms and Pollution Surplus. (Preliminary draft available under request)

This paper examines the production behavior of shale oil firms in response to the Paris Agreement. Using detailed project-level data, we construct a measure of toxic chemical usage in shale wells. Our findings indicate that adopting greener well practices does not lead to production gains. Additionally, we observe that the syndicated loan market did not significantly alter firms' debt levels or interest rates but did shorten the maturity of new debt issuances. Furthermore, our analysis shows that highly indebted firms with strong financial health, fewer financial constraints, greater market power, and weaker environmental commitments do not take green production after the Paris Agreement.