Wildfires in the United States, especially in Western states, increasingly pose a significant risk to entire communities, often destroying homes, businesses and lives. When wildfires sweep through a region they also affect the economy as a whole, decreasing U.S. firms’ values to stockholders when businesses incur physical damage, cause or experience supply chain issues, or lose employees.
Yet U.S. firms rarely report their wildfire risks in required federal filings and instead bury such risks in nonspecific risk disclosures, according to new research led by the University of California, Davis.
The study was published this month in the Journal of Business Finance & Accounting.
On average, only 6.1% of firms with wildfires in their headquarters county mention wildfire information in their required disclosures and exhibits filed with the Security and Exchange Commission, according to the study. The disclosures and exhibits are included…