Does air pollution affect earnings management? Evidence from China

Jiang, Dequan; Li, Weiping; Shen, Yang; Yu, Shuangli

doi:10.1016/j.pacfin.2022.101737

Cited by 31 publications

(17 citation statements)

References 59 publications

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“…Moreover, it has an irreversible impact on the inflow of regional labor and triggers the phenomenon of escaping from "Beijing, Shanghai, and Guangzhou," which affects the urbanization process (Hanlon, 2016). Additionally, air pollution seriously impacts the stock prices and financial decisions of microenterprises (Lepori 2016), the cost of debt financing (Tan et al, 2022), the accrual earnings management (Jiang et al, 2022a;Jiang et al, 2022b), and investment efficiency (He and Lin 2022). Thus, air pollution with PM2.5 as the primary pollutant not only seriously affects regular life but also has a huge negative impact on microeconomic agents in China.…”

Section: Introductionmentioning

confidence: 99%

Impact of air quality on enterprise productivity: Evidence from Chinese listed companies

Liu

Yang

Cai

2023

Front. Environ. Sci.

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We provide insights and innovative ideas for China to achieve green development and promote high-quality economic development by studying the impact of air quality on enterprise productivity. This paper uses data from 2008 to 2016 for A-share companies listed on the Shanghai and Shenzhen stock markets, as well as the levels of particulate matter under 2.5 μm in diameter for 214 major Chinese cities. At the same time, this paper innovatively applies regression discontinuity and the Spatial Durbin Model for empirical testing. Considering the endogeneity, we choose the air flow index as an instrumental variable and the generalized space two-stage least squares method for the endogenous test. Additionally, we use dynamic regression and different spatial weight matrix to conduct robustness tests and reselect data from 2008 to 2012 and 2013 to 2016 as samples. Moreover, we test corporate heterogeneity from three perspectives: pollutant type, firm equity, and an industry’s technological level. The results show that the deterioration of local air quality significantly inhibits firm productivity, while the spatial spillover effects of pollution from surrounding cities also have a significant dampening effect on firm productivity. This negative effect is transmitted through research and development innovation capacity, human capital, and government subsidies. This empirical evidence from listed companies can be used for evaluating air quality management to enhance enterprise productivity, as well as to provide policy recommendations for boosting firm productivity through improved air quality.

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Section: Introductionmentioning

confidence: 99%

Impact of air quality on enterprise productivity: Evidence from Chinese listed companies

Liu

Yang

Cai

2023

Front. Environ. Sci.

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“…earnings per share (𝐸𝑃𝑆), return on total assets (𝑅𝑂𝐴), and return on equity (𝑅𝑂𝐸), are selected. However, given the prevalence of earnings management behavior in domestic listed firms (Chen et al, 2013;Jiang et al, 2022;Shan, 2015), the article also adopts adjusted 𝐸𝑃𝑆, 𝑅𝑂𝐴, and 𝑅𝑂𝐸. In the consideration that Profit is unable to reflect a firm's actual economic gains.…”

Section: Firm Performancementioning

confidence: 99%

“…The variable 𝐹𝑖 𝑖 represents a firm's performance, measured using 𝐸𝑃𝑆, 𝑅𝑂𝐴, and 𝑅𝑂𝐸. Additionally, considering the prevalence of earnings management in Chinese listed companies (Chen et al, 2013;Jiang et al, 2022;Shan, 2015), the article conducts a robustness test using adjusted performance metrics, i.e. 𝐸𝑃𝑆2, 𝑅𝑂𝐴2, and 𝑅𝑂𝐸2 that exclude non-recurring gains and losses.…”

Section: The Modelmentioning

confidence: 99%

Assessing the Impact of Business Model Innovation on Firm Performance: Insights from the China Growth Enterprise Market

Ye¹,

Wang²

2023

IBR

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This article explores the impact of business model innovation (BMI) on firm performance by analyzing 2,970 annual reports of firms in the China Growth Enterprise Market (GEM) from 2012 to 2017. The dependent variable bmi is constructed using crawler technology to reflect the business model innovation of the research sample. Four financial indicators, i.e. gross profit ratio total assets (GPA), earnings per share (EPS), return on total assets (ROA), and return on equity (ROE), are used to represent firm performance. The results suggest that BMI has a positive impact on a firm's performance in China, and the robustness test confirms the findings. This study provides empirical evidence of the impacts of BMI on firm performance in the China GEM and offers managerial implications for governments, firms, and entrepreneurs.

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“…Our main results are estimated by ordinary least squares (OLS) regression, while OLS regression reflects the average reaction of the dependent variable to the independent variable. Thus, OLS regression results may be biased, and we follow Jiang et al (2022) to carry out the quantile regression for the first, median, and third quarters. Panel D of Table 10 provides the results, and it shows that the coefficient of the peer CSR is ~1, and it is significant at the 1% level in the three models (t = 6.35, 2.79, and 4.17, respectively).…”

Section: Idiosyncratic Returnmentioning

confidence: 99%

Keeping up with the CSR Joneses: The impact of industry peers on focal firms’ CSR performance

Chen

Jiang

2023

Humanit Soc Sci Commun

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Using US-listed firms from 2000 to 2015 as a sample, we report a strong enhancing effect of industry peers’ corporate social responsibility (CSR) performance on focal firms’ CSR performance. Firms improve their CSR performance by ~10.15% standard deviation when other peer firms in the same industry increase their CSR by one standard deviation. Moreover, this peer effect is more substantial when the peer firms are closer to focal firms, are included in SP500 index, and have a relatively larger size than focal firms. Focal firms are less likely to follow industry peers if they are industry leaders, have stronger earnings capacity, occupy foreign business and receive fewer analyst followings. Finally, firms following industry peers’ CSR policies achieve less product market shares and poorer performance, but a higher firm value. We suggest that executives should not blindly follow peer firms’ suit and strategically invest in CSR to achieve higher competitiveness.

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Does air pollution affect earnings management? Evidence from China

Cited by 31 publications

References 59 publications

Impact of air quality on enterprise productivity: Evidence from Chinese listed companies

Impact of air quality on enterprise productivity: Evidence from Chinese listed companies

Assessing the Impact of Business Model Innovation on Firm Performance: Insights from the China Growth Enterprise Market

Keeping up with the CSR Joneses: The impact of industry peers on focal firms’ CSR performance

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