The impact of air pollution on corporate cash holdings

Li, Bin; He, Mingyao; Gao, Fengying; Zeng, Yanjun

doi:10.1016/j.bir.2021.04.007

Cited by 23 publications

(19 citation statements)

References 44 publications

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“…Firstly, smog pollution affects the development of companies. For instance, some studies found that smog pollution affects the debt financing ability (Li et al, 2019a), obtaining of subsidies (Li et al, 2019b), cash holdings (Li et al, 2021), and the market value of firms (Li et al, 2018;Peng et al, 2021). In addition, regulations of smog pollution governance internalizes the costs of air pollution and, as a result, company profits decline sharply.…”

Section: Smog Pollution and Investor Sentimentmentioning

confidence: 99%

The Psychological Impact of Smog Pollution on Investors

Liu

Zhang

et al. 2022

Front. Psychol.

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Section: Smog Pollution and Investor Sentimentmentioning

confidence: 99%

The Psychological Impact of Smog Pollution on Investors

Liu

Zhang

et al. 2022

Front. Psychol.

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“…Similarly, the empirical analysis of Li et al [40] shows that air pollution has negative impact on the total government subsidies obtained by companies. In aspect of other aspects in operation, smog can impact company from inside, and have significant influence on total factor productivity [41] and cash holdings [42]. In addition, smog can also impact company from outside, and influence the market value of firms [43,44] and the audit quality of auditors [45].…”

Section: Environmental Uncertainty Under the Influence Of Smog Pollutionmentioning

confidence: 99%

Smog Pollution, Environmental Uncertainty, and Operating Investment

Li¹,

Shi

Yang

et al. 2021

Atmosphere

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Smog pollution in China has drawn worldwide attention. Using companies’ data from Chinese Securities Markets and Accounting Research database (CSMAR) and air quality monitoring data from China National Environmental Monitoring Centre(CNEMC), we employ the PM2.5 concentration as a proxy for smog pollution and examine the effect of smog pollution on company environmental uncertainty and operating investment in 74 key cities in China. The empirical results show that smog pollution causes an increase in company environmental uncertainty and a decrease in operating investment for Chinese listed companies, with environmental uncertainty as a mediating variable. Smog pollution can positively influence companies’ environmental uncertainty through their employees and high pressure from the public and government. According to the real-options-based investment approach, companies choose to “wait and see” and, correspondingly, reduce operating investment under high environmental uncertainty such as that caused by smog pollution. Additionally, we find that state-owned enterprises are more significantly influenced by smog pollution in terms of environmental uncertainty and operating investment because of their close relationships with the government and their responsibility to set an example among Chinese companies in the fight against smog pollution.

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“…The premature deaths in Türkiye from the exposure to air pollution represent one of the highest rates in Europe (HEAL, 2015). The low quality of air can affect not only the physical health but also negatively impact people’s mental health and consequently may lead to management bad decisions, low employee productivity and high business risk (Tan et al , 2021a; Li et al , 2021). This study contributes to the finance literature, first, by shedding light on how air pollution affects corporate cash holdings, and the role of operational risk and environmental liabilities in this context.…”

Section: Introductionmentioning

confidence: 99%

The effect of air pollution on cash holdings and financial leverage

Kalash

2023

JGR

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Purpose The purpose of this paper is to investigate whether air pollution has significant impact on corporate cash holdings and financial leverage. Design/methodology/approach The data of 199 firms listed on Istanbul Stock Exchange during the period 2009–2020 is analyzed by using pooled ordinary least squares and two-step system generalized method of moments models. Findings The results indicate that firms in regions with high air pollution tend to increase cash level. In addition, the positive effect of air pollution on cash level is stronger and more significant for environmentally sensitive firms and firms with low operational and distress risk. The results also show insignificant effect of air pollution on financial leverage. Practical implications Firms in regions with high air pollution should conduct proactive environmental protection procedures and enhance their eco-efficiency instead of holding excess cash that could negatively affect financial performance. In this context, policymakers should provide financial facilities to firms located in regions with high air pollution and that have low ability to finance environmental investments. On the other hand, the environmental laws and regulations introduced by regulatory authorities can enhance the economic development and firm performance by decreasing the adverse influences of air pollution on corporate financial policies. Originality/value To the best of the author’s knowledge, this research is one of few that examines the impact of air pollution on corporate cash holdings and financial leverage in emerging markets.

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The impact of air pollution on corporate cash holdings

Cited by 23 publications

References 44 publications

The Psychological Impact of Smog Pollution on Investors

The Psychological Impact of Smog Pollution on Investors

Smog Pollution, Environmental Uncertainty, and Operating Investment

The effect of air pollution on cash holdings and financial leverage

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