What’s bad for the environment is also bad for the market: the impact of air quality on the mispricing of dual-listed shares in China

Ming-Hung Wu, Wei-Ling Huang and Pei-Shih Weng

Applied Economics Letters, 2025, vol. 32, issue 5, 671-674

Abstract: Examining the influence of air quality on the mispricing of dual-listed companies in the China stock market, this study shows that poor air quality exacerbates the premium between A-share and H-share prices, and that persistent air quality degradation intensifies this effect. Our findings suggest that air pollution-induced cognitive impairments among local investors contribute to A-share overpricing in mainland China, widening the price gap with H-shares traded in Hong Kong. Our results reveal a connection between financial markets and the environment, providing support for green finance initiatives that emphasize the negative market impacts of environmental harm.

Date: 2025
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DOI: 10.1080/13504851.2023.2282142

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