Board co-option and its ecological costs: evidence of increased biodiversity risk
研究发现，董事会中由现任CEO任命的比例越高，企业面临的生物多样性风险越大，且这种效应在监管薄弱、高生物多样性行业和低诉讼环境中更强。
Purpose This study examines whether and how board co-option – the proportion of directors appointed after the incumbent CEO assumes office – affects corporate biodiversity risk. While prior research links co-opted boards to weaker environmental performance, evidence on biodiversity risk, a distinct and financially material environmental concern, remains scarce. We aim to fill this gap by analyzing the governance mechanisms through which board co-option shapes firms' exposure to biodiversity-related risks. Design/methodology/approach Using a large panel of publicly listed firms, we empirically investigate the relationship between board co-option and firm-level biodiversity risk. To address endogeneity and selection concerns, we employ multiple identification strategies, including propensity score matching, entropy balancing and Heckman two-stage models. We further conduct cross-sectional analyses to examine the moderating roles of CEO characteristics, internal controls, external monitoring, industry biodiversity exposure and litigation risk. Findings We document a robust positive association between board co-option and biodiversity risk. A one-standard-deviation increase in board co-option leads to a statistically and economically significant increase in biodiversity risk. The effect is stronger in firms with weak internal and external monitoring, in biodiversity-intensive industries and in low-litigation environments. Board co-option also neutralizes otherwise mitigating CEO characteristics, indicating that governance structure dominates individual managerial traits in shaping biodiversity outcomes. Originality/value This study provides the first systematic evidence linking board co-option to biodiversity risk. By integrating entrenchment and stakeholder agency theory, it extends the corporate governance and sustainability literature and identifies board appointment dynamics as an important determinant of nature-related risk.