The Warning of Haze: Weather and Corporate Investment

24 Pages Posted: 19 Mar 2020

See all articles by Xiuping Zhang

Xiuping Zhang

Xiamen University

Shouyang Wang

Chinese Academy of Sciences (CAS) - Academy of Mathematics and Systems Science

Qingbin Meng

affiliation not provided to SSRN

Weixing Wu

University of International Business and Economics (UIBE)

Date Written: December 2019

Abstract

This paper investigates whether air quality affects corporate investment. Using a sample of Chinese A‐share listed firms from 2007 to 2013, this paper finds that poor air quality is negatively associated with corporate investment and reduction of corporate investment due to air pollution intensifies with manager risk aversion. In addition, this paper provides evidence against the alternative explanation that corporate investment decreases due to government air‐quality regulations. Furthermore, this paper also suggests that poor air quality is negatively associated with investment efficiency. These findings complement existing literature on how weather conditions affect corporate financial decisions.

Keywords: Corporate investment, Risk aversion, Weather

Suggested Citation

Zhang, Xiuping and Wang, Shouyang and Meng, Qingbin and Wu, Weixing, The Warning of Haze: Weather and Corporate Investment (December 2019). Accounting & Finance, Vol. 59, Issue 5, pp. 3029-3052, 2019, Available at SSRN: https://ssrn.com/abstract=3556753 or http://dx.doi.org/10.1111/acfi.12566

Xiuping Zhang (Contact Author)

Xiamen University

Xiamen, Fujian 361005
China

Shouyang Wang

Chinese Academy of Sciences (CAS) - Academy of Mathematics and Systems Science

Beijing
China

Qingbin Meng

affiliation not provided to SSRN

Weixing Wu

University of International Business and Economics (UIBE) ( email )

10, Huixin Dongjie
Changyang District
Beijing, Beijing 100029
China

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