Biodiversity Risk Disclosure and Corporate Default Risk: Evidence from China's Transitional Economy

Against the backdrop of a growing biodiversity crisis and the transition towards high-quality development, the loss of natural capital has begun to translate into micro-corporate financial risks. However, in the existing literature on environmental finance, empirical studies on the microeconomic consequences arising from biodiversity risks are still relatively limited. This study uses text mining to generate a binary indicator of corporate biodiversity risk disclosure (BRD) and evaluates its influence on default risk based on a sample of Chinese A-share listed companies (2015-2023). The results indicate that BRD significantly reduces the probability of corporate default. This core finding remains highly robust after a series of endogeneity and stability tests, notably including a Difference-in-Differences framework leveraging the Kunming-Montreal Global Biodiversity Framework as an exogenous policy shock. The mechanism analysis indicates that BRD reduces risks through three main channels: enhancing information transparency, optimizing internal governance, and strengthening external supervision. The heterogeneity analysis further indicates that this effect is more pronounced for private enterprises, enterprises with higher financing constraints, and industries that are sensitive to biodiversity; at the same time, a developed regional green finance system can generate positive collaborative governance effects. Further analysis indicates that BRD is not merely a defensive measure for avoiding financial difficulties, as it also significantly enhances the overall ESG performance, sustainable development capabilities, and green production efficiency. This study fills an empirical gap from a micro-financial perspective and offers significant evidence to emerging markets on the use of non-financial disclosure to alleviate financing frictions, prevent systematic credit risks, and achieve comprehensive green transformation and sustainable development.