Do financial reports adequately disclose extreme wildfire risk?
Professor Paul Griffin will discuss whether financial reports adequately disclose extreme wildfire risk at this public seminar.
Wildfires pose a significant risk that threatens firm value. That risk may have risen significantly in recent years in light of record-breaking wildfires in the United States and elsewhere. It is an open question, however, whether such increasing wildfire risk affects firms’ disclosures of wildfire-related information. We find that firms exposed to more wildfire days on average provide more textual 10-K disclosure of wildfire-related information in their filings compared to firms exposed to fewer wildfire days, but only for disclosures relating to past operations.
Professor Paul Griffin is a leading international authority in accounting, financial information, and firms’ disclosures. He has published over 70 articles in leading accounting and finance journals, five research monographs for the Financial Accounting Standards Board, and two case books on U.S. corporate financial reporting.
Paul’s work examines how security markets price the information in financial reports. While his early work concentrated on investors’ understanding of and response to financial measures of performance such as earnings and sales, his later work focuses on qualitative and non-financial measures of firm performance. He works now almost exclusively on how the climate crisis is shaping firms’ disclosure policies and how capital markets price information on firm-related climate impacts. He mostly finds that capital markets under-price the risks faced by climate change, including the costs and uncertainties of carbon emissions and the threat of increasingly uncertain extreme weather. In his recent publication in Nature: Energy, one of the world’s preeminent science journals, Professor Griffin warns “Despite increased awareness among investors, physical climate risk from extreme weather remains surprisingly unaccounted for in financial markets.”
Paul is currently Distinguished Professor of Management at UC Davis, having previously been at Stanford University’s Graduate School of Business. He earned both his Ph.D. in accounting and his M.A. in operations research and economic theory from The Ohio State University in Columbus, while his undergraduate degree in accounting was earned at Victoria University of Wellington.