Biodiversity risk and corporate real earnings management: Empirical evidence from China

Amid the intensifying global ecological crisis, biodiversity risk has emerged as an important factor affecting corporate sustainable development. Using Chinese A-share listed companies from 2009 to 2023, this study aimed to examine the impact and mechanism of biodiversity risk on corporate real earnings management. Findings demonstrate that biodiversity risk exacerbates corporate real earnings management, whereas management's high ownership stake mitigates this effect. Mechanism analysis reveals that capital allocation efficiency and operational risk are the key channels through which biodiversity risk affects real earnings management. Heterogeneity tests show that biodiversity risk significantly affects real earnings management in firms with high media attention, weak corporate governance, and intense market competition. This study expands the literature on the economic consequences of biodiversity risk and the factors influencing real earnings management, emphasizing the significance of biodiversity risk, promoting ecological-financial synergistic governance, and realizing win-win economic and environmental benefits.