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How air pollution influences corporate credit spreads: A pre-registered report

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  • Ma, Yunbiao
  • Shao, Jingcong
  • Shi, Beibei

Abstract

This pre-registered study aims to explore the impact of air pollution, an environmental factor, on corporate bond credit spreads. We are going to investigate three questions in this study: (1) whether air pollution exhibits a causal effect on corporate bond risk premiums? (2) what are the underlying mechanisms driving this relationship? (3) how firm-level heterogeneity modulates environmental risk sensitivity? To explore these questions, we collect corporate bonds that have traded in China's exchange markets from 2014 to 2022 to conduct an empirical analysis. These findings underscore the importance of environmental considerations, such as air pollution, in shaping corporate financial risks and investment decisions.

Suggested Citation

  • Ma, Yunbiao & Shao, Jingcong & Shi, Beibei, 2025. "How air pollution influences corporate credit spreads: A pre-registered report," Pacific-Basin Finance Journal, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:pacfin:v:93:y:2025:i:c:s0927538x25002057
    DOI: 10.1016/j.pacfin.2025.102868
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    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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