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

Ziying Yang, Bo Wang and Li Huang

Finance Research Letters, 2024, vol. 62, issue PA

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.

Keywords: Air pollution; Excess perks; External monitors; Monetary compensation; COVID-19 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:62:y:2024:i:pa:s1544612324001326

DOI: 10.1016/j.frl.2024.105102

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