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Does air pollution impair investment efficiency?

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  • He, Guanming
  • Lin, Tiantian

Abstract

Using a sample of 2174 Chinese listed firms for the period 2014–2019, we examine whether air pollution impairs investment efficiency of firms. We find robust evidence that air pollution is negatively associated with firms’ investment efficiency, and that this association is more pronounced for small firms, non-state-owned firms, financially constrained firms, and firms confronted with high business risk or intense industrial product market competition.

Suggested Citation

  • He, Guanming & Lin, Tiantian, 2022. "Does air pollution impair investment efficiency?," Economics Letters, Elsevier, vol. 215(C).
    • Handle: RePEc:eee:ecolet:v:215:y:2022:i:c:s0165176522001227
    DOI: 10.1016/j.econlet.2022.110490
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    References listed on IDEAS

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    Cited by:

    1. Zhou, Bingjun & Gao, Ke & Ning, Jing & Zhang, Anqi & Dai, Jiapeng, 2024. "Does air pollution change the business strategy for investment? The strategic influence of national governance," Finance Research Letters, Elsevier, vol. 63(C).
    2. Xu, Weidong & Huang, Wenxuan & Li, Donghui, 2024. "Climate risk and investment efficiency," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 92(C).
    3. Wu, Junfeng & Liu, Baohua & Chang, Samuel & Chan, Kam C., 2022. "Effects of air pollution on accounting conservatism," International Review of Financial Analysis, Elsevier, vol. 84(C).

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    More about this item

    Keywords

    Air pollution; Investment efficiency;

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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