ESG news and firm value: Evidence from China’s automation of pollution monitoring

Darwin Choi, Abhiroop Mukherjee and Zexin Zheng

Research in International Business and Finance, 2025, vol. 78, issue C

Abstract: We study how financial markets integrate news about pollution abatement costs into firm values. Using China’s automation of pollution monitoring, we find that firms with factories in bad-news cities – cities that used to report much lower pollution than the automated reading – see significant declines in stock prices. This is consistent with the view that investors expect firms in high-pollution cities to pay significant adjustment and abatement costs to become “greener.” However, the efficiency with which such information is incorporated into prices varies widely – while the market reaction is quick in the Hong Kong stock market, it is considerably delayed in the mainland ones, resulting in a drift. The equity markets expect most of these abatement costs to be paid by private firms and not by state-owned enterprises, and by brown firms and not by green firms.

Keywords: Pollution abatement; Market efficiency; Automatic monitoring system; State-owned Enterprises; Brown firms (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0275531925002806
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:78:y:2025:i:c:s0275531925002806

DOI: 10.1016/j.ribaf.2025.103024

Access Statistics for this article

Research in International Business and Finance is currently edited by T. Lagoarde Segot

More articles in Research in International Business and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().