Effect of Air Pollution on the Stock Yield of Heavy Pollution Enterprises in China’s Key Control Cities Under Climate Change

Under the background of climate change, the haze days in China have increased significantly, which seriously hinders the sustainable development of society and arouses wide attention from the public. However, the researches on the effect of air pollution on the stock yield of heavy pollution enterprise in key control cities are quite limited. Thus, this paper collects the AQI (air quality index) of key control cities (over prefecture-level) in China and the stock yields of listed heavy pollution enterprises in these cities from 2011 to 2016, and through multi-discontinuities regression model, testes the effect of air pollution on the stock yield of heavy pollution enterprise. The results show that: (1) severe air pollution (AQI = 300) has a significant negative influence on stock yield and the results are robust; (2) there is a time effect in the influence of air pollution on stock yield and the negative influence has become significant since 2013. This paper gives a brief discussion on the cause of it and suggests that severe air pollution should be strictly controlled. Only by facing air pollution seriously, can we eliminate air pollution with collective wisdom and concerted efforts and achieve the sustainable development of city. Being the first study to look into the effect of air pollution on stock yield in key control cities in China, this paper provides empirical reference for government supervision departments, stock investors as well as enterprises.