Air pollution, local bias, and stock returns

Xiaoya Ding, Mengmeng Guo and Tao Yang

Finance Research Letters, 2021, vol. 39, issue C

Abstract: Building on research linking environmental factors to investors’ sentiments and the local bias literature, we posit that there is a negative relation between air pollution and a firm's stock return. Consistent with our hypothesis, we find that firms located in cities that experience higher levels of air pollution exhibit lower stock returns. In line with our central hypothesis, we observe the air pollution effect is stronger among firms that are more likely to be held by local investors, such as younger firms, firms that have lower institutional ownership, and firms covered by fewer analysts.

Keywords: Air pollution; Stock return; Local bias (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:39:y:2021:i:c:s1544612320303305

DOI: 10.1016/j.frl.2020.101576

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