The warning of haze: weather and corporate investment

Xiuping Zhang, Shouyang Wang, Qingbin Meng and Weixing Wu

Accounting and Finance, 2019, vol. 59, issue 5, 3029-3052

Abstract: This paper investigates whether air quality affects corporate investment. Using a sample of Chinese A‐share listed firms from 2007 to 2013, this paper finds that poor air quality is negatively associated with corporate investment and reduction of corporate investment due to air pollution intensifies with manager risk aversion. In addition, this paper provides evidence against the alternative explanation that corporate investment decreases due to government air‐quality regulations. Furthermore, this paper also suggests that poor air quality is negatively associated with investment efficiency. These findings complement existing literature on how weather conditions affect corporate financial decisions.

Date: 2019
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