American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Polluted IPOs
American Economic Journal: Economic Policy
(pp. 160–87)
Abstract
Chinese companies must undergo a review by a regulator-appointed committee before proceeding with initial public offerings (IPOs). We find that firms—particularly, politically unconnected ones—are more likely to pass this review on polluted days (i.e., with a high level of PM2.5). The effect appears driven by reduced cognitive capacity among reviewers, reflected in fewer and simpler questions raised during review sessions. Notably, firms approved on polluted days show no significant performance difference from other firms within three years after the IPO. The findings suggest that pollution-induced cognitive fatigue may paradoxically reduce distortions in a politically influenced approval process.Citation
Miao, Meng, Wei Wang, and Zhengyu Zuo. 2026. "Polluted IPOs." American Economic Journal: Economic Policy 18 (4): 160–87. DOI: 10.1257/pol.20240900Additional Materials
JEL Classification
- D22 Firm Behavior: Empirical Analysis
- G24 Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies
- G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- K22 Business and Securities Law
- P28 Socialist Systems and Transitional Economies: Natural Resources; Energy; Environment
- P31 Socialist Enterprises and Their Transitions
- Q52 Pollution Control Adoption and Costs; Distributional Effects; Employment Effects