Threatened by Wildfires: What Do Firms Disclose in Their 10-Ks?

52 Pages Posted: 19 Oct 2020 Last revised: 2 Jun 2021

See all articles by Paul A. Griffin

Paul A. Griffin

University of California, Davis - Graduate School of Management

Yijing Jiang

Boston University - Questrom School of Business

Estelle Sun

Boston University - Questrom School of Business

Date Written: June 1, 2021

Abstract

We examine the determinants of firms’ 10-K disclosures on the threat of and exposure to wildfires. We match the location of wildfires in the United States to firms in the same county as the wildfire. We first establish that wildfire disclosure is far from widespread. On average, 6.1 percent of firms with wildfires in their headquarter county mention wildfire information in their 10-Ks. Second, we find that the number of wildfire days in a company’s headquarter county is a key determinant of wildfire disclosure. The sensitivity of wildfire disclosure to wildfire exposure has also increased in recent years, emanating mainly from firms having experienced wildfires impacting their past operations, in the western states and the utility and banking industries, and from those exhibiting a high level of tangible assets. Third, we find that wildfire exposure has no bearing on stock price, whereas more wildfire-related disclosure lowers stock price.

Keywords: Wildfire risk, wildfire exposure, 10-K disclosure, determinants of wildfire disclosure

JEL Classification: G10, M41, M48, Q51, Q56

Suggested Citation

Griffin, Paul A. and Jiang, Yijing and Sun, Estelle Yuan, Threatened by Wildfires: What Do Firms Disclose in Their 10-Ks? (June 1, 2021). Available at SSRN: https://ssrn.com/abstract=3683551 or http://dx.doi.org/10.2139/ssrn.3683551

Paul A. Griffin

University of California, Davis - Graduate School of Management ( email )

3102 Gallahger Hall
Davis, CA 95616
United States
(530) 752-7372 (Phone)
(425) 799-4143 (Fax)

HOME PAGE: http://www.gsm.ucdavis.edu/griffin/

Yijing Jiang

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

Estelle Yuan Sun (Contact Author)

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States
1-617-353-2353 (Phone)

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