Do Financial Reports Adequately Disclose Extreme Wildfire Risk?
Paul Griffin (Distinguished Professor of Management, UC Davis)
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.