The smog that hovers: Air pollution and asset prices

Lei Guo, Xing Han and Youwei Li

Finance Research Letters, 2023, vol. 53, issue C

Abstract: Air pollution affects mental well-being (mood) and amplifies behavioral biases. We test the adverse impact of air pollution on asset prices through the lens of dual-listed stocks. Using regression analysis and difference-in-differences tests, we document that a sharp increase of air pollution (in one location) leads to an immediate deterioration of the price parity of dual-listed shares, which is consistent with the air pollution-induced depressive symptoms. Moreover, increased institutional ownership attenuates the adverse impact of air pollution on asset prices, as institutions are less susceptible to air pollution-induced symptoms than individuals.

Keywords: Air quality; Pollution; Causal effect; Dual-listed stocks; Asset prices (search for similar items in EconPapers)
JEL-codes: G02 G10 Q5 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:53:y:2023:i:c:s1544612323000077

DOI: 10.1016/j.frl.2023.103633

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