Air pollution and green mergers and acquisitions: An empirical study on heavily polluting enterprises

Liangkai Zhao and Huayue Yang

International Review of Economics & Finance, 2025, vol. 103, issue C

Abstract: This study utilizes comprehensive data from Chinese listed companies covering the period from 2014 to 2018 to analyze the impact of air pollution on green mergers and acquisitions (M&As) of heavily polluting enterprises (HPEs). Our findings indicate that air pollution significantly promotes green M&As of HPEs. The robustness of our results is validated through various identification methods and alternative measures. Additionally, we identify government pressure on air pollution governance as a potential mechanism underlying the observed relationship. Furthermore, the incentive effect of air pollution on green M&As of HPEs is more pronounced among key-monitored enterprises, enterprises located in cities where officials have received promotions and state-owned enterprises. Moreover, air pollution also significantly enhances the financial and environmental performance of HPEs after green M&As. Overall, our study illuminates the economic consequences of air pollution, thereby contributing to the existing literature on air pollution and corporate green M&As.

Keywords: Air pollution; Green mergers and acquisitions; Heavily polluting enterprises; Government pressure on air pollution governance (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:103:y:2025:i:c:s1059056025006422

DOI: 10.1016/j.iref.2025.104479

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