Initial Public Offerings and Air Pollution: Evidence from China

Journal of Asia Business Studies, Vol. 9 Iss: 1, pp.99 - 114

Posted: 11 Oct 2014 Last revised: 26 Feb 2015

See all articles by Yan Luo

Yan Luo

Fudan University - School of Management

Xiaolin Qian

Eastspring Investment

Jinjuan Ren

University of Macau

Date Written: September 20, 2014


Purpose - The purpose of this study is to investigate the impact of firms’ financing activities on the environment. Faced with a deteriorating global environment, both corporations and regulatory bodies have become more responsive to environmental conservation problems. However, existing literature has not adequately addressed the question of whether and how firms’ business activities influence the environment.

Design/methodology/approach – Using the daily air pollution indices of 120 Chinese cities from 2001 to 2012, this study found that air pollution is alleviated after firms’ initial public offerings (IPOs). This paper proposes that firms’ IPOs influence the ambient air pollution through three channels: production scale, technical reform and corporate governance effects.

Findings – The authors of this study found that the proceeds acquired in IPOs result in enlarged production scales that increase pollution, while the investment of these proceeds in social responsibility-related technical reform and enhanced corporate governance reduce pollution. Moreover, the authors discover that firms with a higher state ownership emit fewer pollutants, thus supporting the positive monitoring role of the Chinese government.

Originality/value – Although this study investigates the impact of IPOs on air quality in China, the proposed analytical framework also applies to studies of other financing activities in global markets. This study has important policy implications for government regulations in environmental controls.

Keywords: air pollution; IPO; corporate social responsibility; Chinese firms

JEL Classification: G34, I15

Suggested Citation

Luo, Yan and Qian, Xiaolin and Ren, Jinjuan, Initial Public Offerings and Air Pollution: Evidence from China (September 20, 2014). Journal of Asia Business Studies, Vol. 9 Iss: 1, pp.99 - 114, Available at SSRN: or

Yan Luo

Fudan University - School of Management ( email )

No. 670, Guoshun Road
No.670 Guoshun Road
Shanghai, 200433

Xiaolin Qian

Eastspring Investment ( email )

10 Marina Boulevard, #32-01
Marina Bay Financial Centre Tower 2
Singapore, 018983
018983 (Fax)

Jinjuan Ren (Contact Author)

University of Macau ( email )

Room 4079, E22, Faculty of Business Administration
University of Macau
Taipa, Taipa Nil
(853) 8822-4185 (Phone)


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