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Eat, drink, entertain, travel? The impact of air pollution on excess perks — natural experiment evidence from COVID-19

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  • Yang, Ziying
  • Wang, Bo
  • Huang, Li

Abstract

This paper investigates the impact of air pollution on excess executives’ perks. To establish causality, we exploit an exogenous event (i.e., COVID-19), which restrained executives’ entertainment activities and travelling due to social distancing and lockdown policies. Using a difference-in-difference model and a sample of listed firms in China from 2016 to 2022, we find that excess perks of companies located in polluted cities reduce more due to COVID-19 than those of companies in cities with good air, indicating that air pollution positively affects excess perks. Further analyses demonstrate that external monitors and managerial monetary compensation can curb excess perk consumption.

Suggested Citation

  • Yang, Ziying & Wang, Bo & Huang, Li, 2024. "Eat, drink, entertain, travel? The impact of air pollution on excess perks — natural experiment evidence from COVID-19," Finance Research Letters, Elsevier, vol. 62(PA).
    • Handle: RePEc:eee:finlet:v:62:y:2024:i:pa:s1544612324001326
    DOI: 10.1016/j.frl.2024.105102
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