The impact of air pollution on financial reporting quality: Evidence from China

Publication Type

Journal Article

Publication Date

9-2022

Abstract

In this study, we investigate whether the unpleasant mood of managers caused by air pollution leads to poorer decision-making quality. Using a sample of 9,282 firm-year observations from 2014 to 2017 in China, we show that (i) the mood of managers becomes more negative as air quality decreases; and (ii) there is a negative relation between air pollution and financial reporting quality. Furthermore, this association is stronger for firms with (i) weaker corporate governance; and (ii) top management teams with a lower average age, fewer females and a lower average educational level. Our results hold through various robustness tests.

Keywords

Air pollution, Financial reporting quality, Mood, RDD

Discipline

Computer Sciences | Environmental Sciences | Finance and Financial Management | Organizational Behavior and Theory

Research Areas

Information Systems and Management

Publication

Accounting and Finance

Volume

62

Issue

3

First Page

3609

Last Page

3644

ISSN

0810-5391

Identifier

10.1111/acfi.12898

Publisher

Wiley

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1111/acfi.12898

This document is currently not available here.

Share

COinS