Impact of Urban Air Quality on Total Factor Productivity: Empirical Insights from Chinese Listed Companies

Xiaowei Ding, Panfeng Wang, Xuyan Jiang (), Wenyi Zhang, Boris I. Sokolov and Yali Liu
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Xiaowei Ding: Department of Credit Theory and Financial Management, St. Petersburg State University, Universitetskaya Nab. 7/9, St. Petersburg 191034, Russia
Panfeng Wang: Department of Risk Management and Insurance, St. Petersburg State University, Universitetskaya Nab. 7/9, St. Petersburg 191034, Russia
Xuyan Jiang: Department of Credit Theory and Financial Management, St. Petersburg State University, Universitetskaya Nab. 7/9, St. Petersburg 191034, Russia
Wenyi Zhang: Department of Industrial Management and Economic Trade, Peter the Great St. Petersburg Polytechnic University, Polytechnicheskaya, 29 B, St. Petersburg 195251, Russia
Boris I. Sokolov: Department of Credit Theory and Financial Management, St. Petersburg State University, Universitetskaya Nab. 7/9, St. Petersburg 191034, Russia
Yali Liu: Department of Statistics, Accounting and Audit, St. Petersburg State University, Universitetskaya Nab. 7/9, St. Petersburg 191034, Russia

Sustainability, 2024, vol. 16, issue 9, 1-24

Abstract: Urban air quality is inextricably linked to the operations of micro-firms. This paper employs the “Qinling-Huaihe” River demarcation as an instrumental variable to construct a regression discontinuity design (RDD) coupled with the two-stage least squares (2SLS) approach. This methodological framework is utilized to investigate the influence of urban air quality on the corporate total factor productivity (CTFP) of publicly listed manufacturing firms from 2015 to 2020. Drawing on the broken windows theory of urban decay and the general equilibrium theory, this research elucidates a significant adverse effect of urban air pollution on CTFP. We rigorously confirm the validity of the RDD by conducting covariate continuity tests and manipulating distributional variables. Furthermore, the robustness of the baseline regression outcomes is substantiated through a series of sensitivity, robustness, and endogeneity checks, employing alternative instrumental variables. The analysis extends to examining the heterogeneity across environmental attributes, regional features, and green branding. The mechanistic investigation reveals that public environmental concerns, financing constraints, and investments in technological innovation serve as mediators in the nexus between urban air pollution and CTFP. Additionally, it is observed that environmental regulation exerts a positive moderating influence, whereas female leadership has a negative impact in this context. The imperative for timely environmental governance is underscored by these findings, which offer crucial insights for policymakers seeking to refine business environment strategies and for corporations aiming to pursue sustainable growth.

Keywords: urban air quality; corporate total factor productivity; impact mechanism; Qinling-Huaihe River line (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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