Corporate Finance 2025-12-22

We show that firms with higher environmental and social (ES) engagement exhibited lower financial reporting quality (FRQ) during the COVID-19 crisis—a pattern not observed in the pre-crisis period. We argue that this decline can be driven by increased complexity and reduced monitoring effectiveness under crisisinduced uncertainty. The result is robust across different ES measures, including ES scores and (social) media sentiment, and holds under both standard and synthetic difference-in-differences approaches. The effect is more pronounced in contexts with greater government intervention via income support and debt relief, policies that may have added to reporting complexity. At the firm level, the decline in FRQ is stronger among firms with weaker governance or management practices—specifically when the CEO pay is not linked to shareholder returns or that of senior executives to sustainability objectives, and with lower strategic or institutional ownership. We identify potential channels for the decline in FRQ, such as increased variation in depreciation and amortization expenses, intangible assets, R&D spending, inventories, and labor costs during the crisis. Mircea Epure Serhat Hasancebi environmental, social, governance, financial reporting quality, crisis 2025-12 Sustainability-linked finance (SLF) offers a promising pathway to close the corporate adaptation finance gap by linking borrowing costs to climate-resilience performance. However, current instruments fall short of their potential. Analysing 701 SLF instruments issued by 395 firms across real estate, electric utilities, and agrifood, we compare embedded key performance indicators (KPIs) with those disclosed in sustainability reports. Across adaptation, resilience, and combined MAR (mitigation–adaptation–resilience) themes, firms report 2, 619 relevant KPIs, yet only 511 (19.5%) are embedded in financial contracts—leaving 80.5% unenforced. This fourfold gap highlights a significant opportunity to expand SLF coverage using metrics firms already track. The bottleneck is not data availability but a lack of standardised, verifiable A&R benchmarks. We propose a suite of process-based KPIs and contractual mechanisms to bridge this gap, enabling SLF to evolve into a credible, scalable tool for embedding climate resilience into corporate strategy and unlocking private capital for adaptation. Resendiz, Jose L. Ranger, Nicola Mahul, Olivier 2025-09 We show that firms with higher environmental and social (ES) engagement exhibited lower financial reporting quality (FRQ) during the COVID-19 crisis—a pattern not observed in the pre-crisis period. We argue that this decline can be driven by increased complexity and reduced monitoring effectiveness under crisis- induced uncertainty. The result is robust across different ES measures, including ES scores and (social) media sentiment, and holds under both standard and synthetic difference-in-differences approaches. The effect is more pronounced in contexts with greater government intervention via income support and debt relief, policies that may have added to reporting complexity. At the firm level, the decline in FRQ is stronger among firms with weaker governance or management practices—specifically when the CEO pay is not linked to shareholder returns or that of senior executives to sustainability ob jectives, and with lower strategic or institutional ownership. We identify potential channels for the decline in FRQ, such as increased variation in depreciation and amortization expenses, intangible assets, R&D spending, inventories, and labor costs during the crisis Serhat Hasancebi Mircea Epure crisis, environmental circumscription, financial reporting quality, governance, social 2025-12 This paper proposes a simple but effective tool to measure firms' exposure to climate risk: the market. We develop a model showing that abnormal stock returns around significant climate policy events measure a firm's exposure to climate risk. Building on this theoretical foundation, we create market-based greenness measures based on abnormal returns around UN climate conferences. Our measurement of climate risk covers around 36, 000 international firms, a tenfold increase relative to existing measures. It is associated with lower present and future carbon emissions and provides explanatory power distinct from existing climate risk measures. Market-based green firms are more likely to file green patents, have lower stock-price volatility, and tend to be financially more robust. At the country level, market-based greenness is associated with lower emission intensity and a larger share of renewable energy. Konrad Adler Oliver Rehbein Matthias Reiner Jing Zeng greenness, green firms, climate risk, climate change 2025-02 This paper examines crowdfunding of a risky project with constant returns to scale. The crowdfunder's chosen threshold and interest rate jointly determine profit and welfare via information aggregation and investors' information acquisition and bidding decisions. At fixed investor strategies, a higher threshold funds fewer projects but raises the ratio of good to bad quality among those funded – a "crowdblessing" or positive selection lacking in standard finance. This also reduces incentives to acquire and use private information, as do interest rate increases. Optimal design trades off the scale of investment against the level of crowdblessing. Surprisingly, profit-maximizers induce excessive information acquisition to limit investor rent. Comparative statics show that information acquisition falls with its cost, rises with its precision and falls with prior optimism. Costs reduce welfare but may raise profits by facilitating rent-extraction. Sjaak Hurkens Matthew Ellman costly information, crowdfunding, P2P finance, rent extraction 2025-12