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Initial public offerings and air pollution: evidence from China

Yan Luo (School of Management, Fudan University, Shanghai, China)
Xiaolin Qian (Faculty of Business Administration, University of Macau, Taipa, Macau)
Jinjuan Ren (Faculty of Business Administration, University of Macau, Taipa, Macau)

Journal of Asia Business Studies

ISSN: 1558-7894

Article publication date: 5 January 2015




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.


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.


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.


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.



The authors sincerely thank Ms. Jin Jin for her excellent research assistance in the preliminary data analysis. The authors also thank Rozita from Editage and Ms. WL Ma for proofreading this manuscript. Jinjuan Ren acknowledges the financial support from University of Macau (MYRG071(Y1-L2)-FBA11-RJJ), and Yan Luo acknowledges the financial support from the National Natural Science Foundation of China (NSFC project number 71402032).


Luo, Y., Qian, X. and Ren, J. (2015), "Initial public offerings and air pollution: evidence from China", Journal of Asia Business Studies, Vol. 9 No. 1, pp. 99-114.



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