Air pollution, regulations on emission and firms' social responsibility

• Main Author: SONG, Jun Myung
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2023
• Subjects: Air Pollution; Emission; Firm Performance; Environmental Stringency; Business Law, Public Responsibility, and Ethics; Environmental Sciences; Finance and Financial Management; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/skbi/28; https://ink.library.smu.edu.sg/context/skbi/article/1026/viewcontent/Air_Pollution__Regulations_on_Emission_.pdf
• Institution: Singapore Management University

This paper examines whether firms adjust their strategy in emission when air pollution is severe. Considering high PM 2.5 as severe air pollution across 65 countries, I show that firms from countries with severe air pollution have low emission score, suggesting that they put less effort in reducing emission. This is because if they improve emission strategy, firm performance deteriorates. However, such relationship disappears when the government’s environmental stringency is strong, suggesting that government’s intervention is crucial for sustainable environment. This paper concludes with analysis on the factors which can mediate the negative impact of air pollution on firms’ emission strategies.