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What’s bad for the environment is also bad for the market: the impact of air quality on the mispricing of dual-listed shares in China

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  • Ming-Hung Wu
  • Wei-Ling Huang
  • Pei-Shih Weng

Abstract

Examining the influence of air quality on the mispricing of dual-listed companies in the China stock market, this study shows that poor air quality exacerbates the premium between A-share and H-share prices, and that persistent air quality degradation intensifies this effect. Our findings suggest that air pollution-induced cognitive impairments among local investors contribute to A-share overpricing in mainland China, widening the price gap with H-shares traded in Hong Kong. Our results reveal a connection between financial markets and the environment, providing support for green finance initiatives that emphasize the negative market impacts of environmental harm.

Suggested Citation

  • Ming-Hung Wu & Wei-Ling Huang & Pei-Shih Weng, 2025. "What’s bad for the environment is also bad for the market: the impact of air quality on the mispricing of dual-listed shares in China," Applied Economics Letters, Taylor & Francis Journals, vol. 32(5), pages 671-674, March.
    • Handle: RePEc:taf:apeclt:v:32:y:2025:i:5:p:671-674
    DOI: 10.1080/13504851.2023.2282142
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