Effects of Air Pollution on Corporate Charitable Donation: Evidence from China

28 Pages Posted: 28 Mar 2022 Last revised: 20 Oct 2022

See all articles by Yanjie Wu

Yanjie Wu

affiliation not provided to SSRN

Kun Li

South China Normal University

Zheng Pan

affiliation not provided to SSRN

Zengfu Li

South China Normal University

Date Written: March 2, 2022

Abstract

Air pollution, which is viewed as one of the global environmental challenges, not only brings huge health costs, but also worsens firm performance. An increasing number of studies have recognized that air pollution has important implications for firm behaviors. However, little research focuses on how air pollution influences corporate charitable donation, which is a key behavior for firms to improve reputation and market valuation. In this paper, we combine the listed data from China Stock Market and Accounting Research Database and city-level air pollution data in China to investigate the impact of air pollution on corporate charitable donation. Using the instrumental variable method and regression discontinuity design, we find that an increase in air pollution would lead to a reduction in corporate charitable donations. Our results are robust to various specifications that consider potential air pollution data manipulation, alternative measures, and exclusion of first-tier cities. We further conduct the heterogeneity analyses and find that state-owned enterprises and firms in highly polluting industries are more sensitive to the change of air pollution.

Keywords: Air pollution; Corporate charitable donations; China

JEL Classification: D22;D64;Q53

Suggested Citation

Wu, Yanjie and Li, Kun and Pan, Zheng and Li, Zengfu, Effects of Air Pollution on Corporate Charitable Donation: Evidence from China (March 2, 2022). Available at SSRN: https://ssrn.com/abstract=4047784 or http://dx.doi.org/10.2139/ssrn.4047784

Yanjie Wu

affiliation not provided to SSRN ( email )

No Address Available

Kun Li (Contact Author)

South China Normal University ( email )

Guangzhou, GuangDong
China

Zheng Pan

affiliation not provided to SSRN

Zengfu Li

South China Normal University ( email )

483 Wushan Str.
Tianhe District
Guangzhou, 510631, Guangdong 510642
China

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