We study if equity markets care about environmental regulation. We use a measure of environmental regulatory stringency derived from the legal documents published by the U.S. Environmental Protection Agency (EPA). We show that in the cross-section of returns, environmental regulation negatively impacts high-emission firms. This effect is smaller for companies with high cash holdings, because of their ability to react flexibly to changing regulations. We construct long-short mimicking portfolios at higher frequencies than the regulatory documents. We show that when climate attention is high, our mimicking portfolios hedge statistically significantly against the heightened risk of stricter environmental regulation. Joint Work with Peter Boswijk, Cees Diks and Simon Trimborn.
Accelerating loss of global biodiversity has prompted nature conservation institutions to call for system-wide, transformative change. Entrepreneurship, recognized as a driver of change across social, environmental and economic spheres, appears relevant to this challenge. However, entrepreneurship literature has largely neglected biodiversity conservation, with leading entrepreneurship journals publishing only six articles directly addressing biodiversity conservation in the past decade. This gap is surprising given the uptake of entrepreneurship scholarship focused on impact and grand challenges, which could hold critical theoretical and practical insights. This article revisits impact-oriented entrepreneurship literature through the lens of the IPBES Transformative Change Assessment. In search of contextually relevant insights for accelerating biodiversity loss, we focus on the Assessment’s five leading challenges to just and sustainable transformative change. We identify strengths, opportunities, and critical gaps in the entrepreneurship literature. Our analysis reveals that both opportunities and critical gaps in entrepreneurship literature converge on social science dimensions; we therefore turn to a discussion on the conservation social sciences. Through theoretical and methodological tools addressing power, politics, and history, we demonstrate how to bridge future entrepreneurship research to the current biodiversity conservation context, with translatable insights for entrepreneurship research on transformative change and grand challenges more broadly.