Skip to main content
Disciplines
Automotive Business IT + Informatics Construction + Real Estate Electrical Engineering + Electronics Energy + Sustainability Insurance + Risk Finance + Banking Management + Leadership Marketing + Sales Mechanical Engineering + Materials
Events
DE
EN
Books
Journals
Topic Page
Marketing
Start single access now
Access for companies
EXTENDED SEARCH
Log in
Top
Published in:
Disaster Probability, Optimal Government Expenditure for Disaster Prevention and Mitigation, and Expected Economic Growth Read chapter Read first chapter

2021 | OriginalPaper | Chapter

15. Effect of Air Pollution on the Stock Yield of Heavy Pollution Enterprises in China’s Key Control Cities Under Climate Change

Authors : Prof. Xianhua Wu, Prof. Ji Guo

Published in: Economic Impacts and Emergency Management of Disasters in China

Publisher: Springer Nature Singapore

Log in

Activate our intelligent search to find suitable subject content or patents.

search-config
loading …

Abstract

Under the background of climate change, the haze days in China have increased significantly, which seriously hinders the sustainable development of society and arouses wide attention from the public. However, the researches on the effect of air pollution on the stock yield of heavy pollution enterprise in key control cities are quite limited. Thus, this paper collects the AQI (air quality index) of key control cities (over prefecture-level) in China and the stock yields of listed heavy pollution enterprises in these cities from 2011 to 2016, and through multi-discontinuities regression model, testes the effect of air pollution on the stock yield of heavy pollution enterprise. The results show that: (1) severe air pollution (AQI = 300) has a significant negative influence on stock yield and the results are robust; (2) there is a time effect in the influence of air pollution on stock yield and the negative influence has become significant since 2013. This paper gives a brief discussion on the cause of it and suggests that severe air pollution should be strictly controlled. Only by facing air pollution seriously, can we eliminate air pollution with collective wisdom and concerted efforts and achieve the sustainable development of city. Being the first study to look into the effect of air pollution on stock yield in key control cities in China, this paper provides empirical reference for government supervision departments, stock investors as well as enterprises.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

  • über 102.000 Bücher
  • über 537 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Maschinenbau + Werkstoffe
  • Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 340 Zeitschriften

aus folgenden Fachgebieten:

  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Versicherung + Risiko




Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Technik"

Online-Abonnement

Mit Springer Professional "Technik" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 390 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Maschinenbau + Werkstoffe




 

Jetzt Wissensvorsprung sichern!

inform now
previous chapter A Comprehensive Estimation of the Economic Effects of Meteorological Services, Based on the Input-Output Method
next chapter Economic Losses and Willingness to Pay for Haze: The Data Analysis Based on 1123 Residential Families in Jiangsu Province, China
Footnotes
3
According to the Notice on Special Emission Limits on Air Pollutants, the six industries in major monitoring areas include thermal power industry, iron and steel industry, petrochemical industry, cement industry, non-ferrous metals industry, and chemical industry. The key control area contains 19 provinces (autonomous regions/municipalities). They are Beijing, Tianjin, Hebei, Shanghai, Jiangsu, Zhejiang, Guangdong, Liaoning, Shandong, Hubei, Hunan, Chongqing, Sichuan Province, Fujian, Shanxi, Shaanxi, Gansu, Ningxia, and Xinjiang.
 
4
According to the Industry Classification Standard for Listed Company (2012 Edition) issued by China Securities Regulatory Commission, the above six industries are further divided into 12 sub-industries: B07 (petroleum and natural gas extraction), B08 (ferrous metal mining), B09 (nonferrous metal mining), C19 (leather and fur products and shoes), C25 (petroleum processing, coking, and nuclear fuel processing), C26 (manufacture of chemical raw materials and chemicals), C28 (manufacture of chemical fibers), C29 (rubber and plastics products), C30 (manufacture of non-metallic mineral), C31 (ferrous metal smelting and rolling), C32 (Non-ferrous metal smelting and rolling), and D44 (production and supply of electricity and heat).
 
5
The bandwidths of the last two Discontinuities 200 and 300 are 50.
 
Literature
Abu, B. A., Siganos, A., & Vagenas-Nanos, E. (2014). Does mood explain the monday effect? Journal of Forecasting,33(6), 409–418.
An, N., Wang, B., Pan, P., et al. (2017). Study on the influence mechanism of air quality on stock market yield and volatility: Empirical test from China based on GARCH model. Finance Research Letters,26, 119–125.
Apergis, N., & Gupta, R. (2017). Can weather conditions in New York Predict South African stock returns? Research in International Business & Finance,41, 377–386.
Arnott, R. D., Kelso, C. M., et al. (1989). Forecasting factor returns an intriguing possilbility. Journal of Portfolio Management,16(1), 28–35.
Baker, M., & Wurgler, J. (2006). Investor sentiment and the cross-section of stock returns. The Journal of Finance,61(4), 1645–1680.
Banerjee, A. V. (1992). A simple model of herd behavior. Quarterly Journal of Economics,107(3), 797–817.
Beecher, M. E., Eggett, D., Erekson, D., et al. (2016). Sunshine on my shoulders: Weather, pollution, and emotional distress. Journal of Affective Disorders,205, 234–238.
Brollo, F., Perotti, R., et al. (2013). The political resource curse. The American Economic Review,103(5), 1759–1796.
Brown, G. W., & Cliff, M. T. (2004). Investor sentiment and the near-term stock market. Journal of Empirical Finance,11(1), 1–27.
Bullinger, M. (1990). Environmental stress: Effects of air pollution on mood. Neuropsychological function and physical state. In S. Puglisi-Allegra, & A. Oliverio (Eds.), Psychobiology of stress (Vol. 54, pp. 241–250).
Cai, W. J., Li, K., Liao, H., Wang, H. J., et al. (2017). Weather conditions conducive to Beijing severe haze more frequent under climate change. Nature Climate Change,7, 257–262.
Chen, Y. B. (2005). Mood fluctuations and volatility of asset prices. Economic Research (China),3, 36–45.
Chen, Y., Jin, G. Z., Kumar, N., et al. (2012). Gaming in air pollution Data? Lessons from China. Social Science Electronic Publishing, 12(3), 1–43.
Chen, X. Y., Zhang, T. Y., & Chen, D. H. (2001). Cross sectional analysis of expected stock returns: Evidence from Chinese stock market. Financial Research (China),6, 22–35.
Chen, S. F., Xie, W., & Zhu, X. Q. (2011). On Chinese investors’ subjective concept of stock market under the expectation of adaptability. Economic Theory and Economic Management (China),7, 76–79.
Coates, J., & Herbert, J. (2008). Endogenous steroids and financial risk taking on a London trading floor. Proceedings of the National Academy of Sciences,105(16), 6167–6172.
Daniel, K., Hirshleifer, D., & Subrahmanyam, A. (1998). Investor psychology and security market under and overreactions. Journal of Finance,53(6), 1839–1885.
Dash, S. R., & Maitra, D. (2017). Does sentiment matter for stock returns? Evidence from Indian stock market using wavelet approach. Finance Research Letters,26, 32–39.
Ding, Z. G., & Suzhi, Z. (2005). Investor sentiment, intrinsic value estimation and stock price volatility. World Management (China),2, 143–145.
Eagles, J. M. (1994). The relationship between mood and hours of sunlight in rapid cycling bipolar illness. Biological Psychiatry,36(6), 422–424.
Evans, G. W., Jacobs, S. V., Dooley, D., & Catalano, R. (1987). The interaction of stressful life events and chronic strains on community mental health. American Journal of Community Psychology,15(1), 23–34.
Fu, S. X., Zhang, B., & Zhang, W. B. (2011). Environmental regulation and “pollution heaven” effect of China’s industrial regional distribution. Journal of Shanxi Finance and Economics University (China),7, 8–14.
Forgas, J. P., & Bower, G. H. (1987). Mood effects on person – perception judgments. Journal of Personality & Social Psychology,53(1), 53–60.
Goetzmann, W. N., Kim, D., Kumar, A., et al. (2015). Weather-induced mood, institutional investors, and stock returns. Review of Financial Studies,28(1), 73–111.
Guo, Y. J., & Zhang, Y. H. (2016). Will air quality affect the stock market? Journal of Financial Research (China),2, 71–85.
Hahn, J., Todd, P., & Van der Klaauw, W. (2001). Identification and estimation of treatment effects with a regression-discontinuity design. Journal of Econometrica,69(1), 201–209.
Harding, N., & He, W. (2016). Investor mood and the determinants of stock prices: An experimental analysis. Accounting & Finance,56(2), 445–478.
He, Z. G. (2001). Empirical study on risk factors of Chinese stock market. Economic Review (China),3, 81–85.
Hirshleifer, D. (2001). Investor psychology and asset pricing. Journal of Finance,56(4), 1533–1597.
Hirshleifer, D., & Shurnway, T. (2003). Good day sunshine: Stock returns and the weather. Journal of Finance,58(3), 1009–1032.
Hsiao, H. F., Xia, C. Y., Yuksel, S., & Dincer, H. (2020). Comparative analysis of investor sentiment with weather conditions using interval type 2 fuzzy hybrid decision making and regression methods: Evidence from Chinese stock market. Economic Computation and Economic Cybernetics Studies and Research,54(3), 263–278.
Hu, W. Y., Huang, C. J., Chang, H. Y., et al. (2015). The effect of investor sentiment on feedback trading and trading frequency: Evidence from Taiwan intraday data. Emerging Markets Finance & Trade,51(1), S111–S120.
Hu, X., Li, O. Z., & Lin, Y. (2014). Particles, pollutions and prices (pp. 1–60). Social Science Electronic Publishing.
Huang, J. K., Xu, N. H., & Yu, H. H. (2020). Pollution and performance: Do investors make worse trades on hazy days? Management Science,66(10), 4455–4476.
Isen, A. M. (1993). Positive affect and decision making. In Handbook of emotions (pp. 261–277).
Jin, Z., Yang, Y., & Liu, Y. (2020). Stock closing price prediction based on sentiment analysis and LSTM. Neural Computing and Applications,32(13), 9713–9729.
Kaplanski, G., & Levy, H. (2010). Sentiment and stock prices: The case of aviation disasters. Journal of Financial Economics,95(2), 174–201.
Kong, D., Liu, S., & Dai, Y. (2012). Environmental policy, company environment protection, and stock market performance: Evidence from China. Corporate Social Responsibility and Environmental Management,21(2), 100–112.
Lee, C., Shleifer, A., & Thaler, R. H. (1991). Investor sentiment and the closed-end fund puzzled. The Journal of Finance,46(1), 75–109.
Lee, D. S. (2008). Randomized experiments from non-random selection in US House elections. Journal of Econometricsm,142(2), 675–697.
Lepori, G. M. (2015). Investor mood and demand for stocks: Evidence from popular TV series finales. Journal of Economic Psychology,48, 33–47.
Lepori, G. M. (2016). Air pollution and stock returns: Evidence from a natural experiment. Journal of Empirical Finance,35, 25–42.
Levy, T., & Yagil, J. (2011). Air pollution and stock returns in the US. Journal of Economic Psychology,32(3), 374–383.
Li, Y. X., & Liu, X. (1997). An empirical study on the impact of dividend policy on stock price. Journal of Chongqing University (China),20(5), 78–82.
Li, Q., & Peng, C. H. (2016). The stock market effect of air pollution: Evidence from China. Applied Economics,48(36), 3442–3461.
Li, X. D., & Wang, Y. N. (2002). An empirical study on the trading behavior of individual securities investors in China. Economic Research (China),11, 54–63.
Lin, S., Yu, Q., Tang, Z. Y., et al. (2006). An experimental study on the “hot hand effect” and “gambler’s fallacy” of Chinese investors. Economic Research (China),8(2), 56–69.
Lin, S., & Yu, Q. (2010). Bounded rationality, animal spirits and market crashes: An experimental study of mood swings and trading behavior. Economic Research (China),8, 115–127.
Liu, Y. G., & Liu, M. G. (2015). Haze affected heavily polluting enterprises earnings management? Based on the political cost hypothesis. Accounting Research (China),3, 79–101.
Lu, J. (2011). Study on the weather effect of Chinese stock market. China Soft. Science, 000(006), 65–78,192.
Lucey, B. M., & Dowling, M. (2005). The role of feelings in investor decision-making. Journal of Economic Surveys,19(2), 217–237.
Lundberg, A. (1996). Psychiatric aspects of air pollution. Otolaryngology - Head and Neck Surgery,114(2), 227–231.
McCrary, J. (2008). Manipulation of the running variable in the regression discontinuity design: A density test. Journal of Econometrics, 142(2), 698–714.
Mehra, R., & Sah, R. (2002). Mood fluctuations, projection bias, and volatility of equity prices. Journal of Economic Dynamic and Control,26(5), 869–887.
Mulatu, A., Gerlagh, R., Rigby, D., & Wossink, A. (2010). Environmental regulation and industry location in Europe. Environmental and Resource Economics,45(4), 459–479.
Nelson, S. (1903). The ABC of stock market speculatio. Fraser Publishing.
Nowakowicz-Debek, B., Saba, L., & Bis-Wencel, H. (2004). The effects of air pollutants on the cortisol and progesterone secretion in Polar Fox (Alopex lagopus). Scientifur,28(3), 218–221.
Oberndorfer, U., & Andreas, Z. (2006). Environmentally oriented energy policy and stock returns: An empirical analysis. ZEW working paper, 06–079.
Papakyriakou, P., Sakkas, A., & Taoushianis, Z. (2019). The impact of terrorist attacks in G7 countries on international stock markets and the role of investor sentiment. Social Science Electronic Publishing,61, 143–160.
Rahman, M. L., & Shamsuddin, A. (2019). Investor sentiment and the price-earnings ratio in the G7 stock markets. Pacific Basin Finance Journal,55, 46–62.
Saunders, E. (1993). Stock prices and wall street weather. American Economic Review,83(5), 1337–1345.
Schottenfeld, R. S. (1992). Psychologic sequelae of chemical and hazardous materials exposures. In J. B. Sullivan & G. R. Krieger (Eds.), Hazardous materials toxicology (pp. 463–470). Baltimore: Williams & Wilkins.
Sexton, A. L. (2012). Responses to air quality alerts: Do Americans spend less time outdoors? Human reactions and political economy. In Association of Environmental and Resource Economists, 2nd Annual Summer Conference, 3–5 June, Asheville, NC.
Shan, L. W. (2011). Psychology or substance: The impact of Wenchuan earthquake on China’s capital market. Economic Research (China),4, 121–134.
Shahzad, F. (2019). Does weather influence investor behavior, stock returns, and volatility? Evidence from the Greater China region. Physica A-Statistical Mechanics and Its Applications,523, 525–543.
Shi, Y., Tang, Y. R., Cui, L. X., et al. (2018). A text mining based study of investor sentiment and its influence on stock returns. Economic Computation and Economic Cybernetics Studies and Research,52(1), 183–199.
Song, J., Zhao, Y., & Wu, C. F. (2003). A model of leader-follower in the securities market. Systems Engineering-Theory & Practice (China),23(1), 1–8.
Tan, S. T., & Chen, Y. Y. (2012). Investment experience can improve the income of investors: Based on the transaction records of investors. Economic Research (China),5, 164–178.
Thaler, R. H. (1993). Advances in behavioral finance. Princeton University Press.
Wang, M., & Sun, J. J. (2004). Stock market returns, volatility and the role of investor sentiment in China. Economic Research (China),10, 75–83.
Wright, W. F., & Bower, G. H. (1992). Mood effects on subjective probability assessment. Organizational Behavior and Human Decision Processes,52(2), 276–291.
Wu, Q., & Lu, J. (2020). Air pollution, individual investors, and stock pricing in China. International Review of Economics & Finance,67, 267–287.
Wu, Y. R., & Han, L. Y. (2007). Incomplete rationality, investor sentiment and closed-end fund puzzle. Economic Research (China),3, 117–129.
Xi, P. H., & Liang, R. B. (2015). The impact of air pollution on local environmental protection input–based on multiple breakpoint regression. Statistical Research (China),32(9), 76–83.
Yang, X., Wang, X. Z., & Tang, X. X. (2004). Herding effects of individual and institutional investors in Chinese stock market. The Journal of Tsinghua University (China),12, 1610–1614.
Ying, Q. W., Yousaf, T., ul Ain, Q., et al. (2020). Investor psychology, mood variations, and sustainable cross-sectional returns: A Chinese case study on investing in illiquid stocks on a specific day of the week. Frontiers in Psychology, 11, 173. https://​doi.​org/​10.​3389/​fpsyg.​2020.​00173.
Yu, J. W., & Wang, C. C. (2011). Breakpoint regression and its application in economics. Economic Perspectives (China),2, 125–131.
Zheng, S. Q., Zhang, X. N., & Sun, Y. (2016). The mechanism of the effect of air pollution on outdoor activities of urban residents. Journal of Tsinghua University (China),56(1), 89–96.
Zhou, H. (1999). Study on the comprehensive index of the effect of climate change on human health. Climate and Environmental Research (China),4(1), 121–126.
Metadata
Title
Effect of Air Pollution on the Stock Yield of Heavy Pollution Enterprises in China’s Key Control Cities Under Climate Change
Authors
Prof. Xianhua Wu
Prof. Ji Guo
Copyright Year
2021
Publisher
Springer Nature Singapore
Book
Economic Impacts and Emergency Management of Disasters in China

Print ISBN: 978-981-16-1318-0

Electronic ISBN: 978-981-16-1319-7

Copyright Year: 2021

DOI
https://doi.org/10.1007/978-981-16-1319-7_15