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Air pollution and corporate risk-taking: Evidence from China

Author

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  • Wang, Jie
  • Wang, Wanwan
  • Yuan, Fang

Abstract

Using a sample of Chinese listed companies from 2014 to 2018, we investigate the effect of air pollution on corporate risk-taking. The findings show that air pollution is negatively related to corporate risk-taking in China. The mechanism analyses find that executive incentives and state ownership weaken the negative effect of air pollution on corporate risk-taking, suggesting that inducing negative mood to executives and increasing environmental regulations by local governments are two potential channels. Overall, our study provides evidence on how air pollution affects corporate policy in terms of risk-taking.

Suggested Citation

  • Wang, Jie & Wang, Wanwan & Yuan, Fang, 2023. "Air pollution and corporate risk-taking: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 570-586.
    • Handle: RePEc:eee:reveco:v:86:y:2023:i:c:p:570-586
    DOI: 10.1016/j.iref.2023.04.001
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    More about this item

    Keywords

    Air pollution; Corporate risk-taking; Environmental psychology; Environmental regulation;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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