The Impact Of Air Pollution On IPO Performance

Since the reform and opening up,with the rapid development of our economy,a large amount of fossil energy has been consumed to promote industrial development and urban modernization.However,along with the progress of economic development,severe air pollution problems has been increasing,which the stock market responded.Many scholars have found that air pollution has impact on the stock market through investor sentiment and investors’ rational analysis.By studying the literature,I believes that air pollution affects the IPOs’ performance through two channels.Through the emotional channels,when investors are exposed to air pollution,the level of adrenal cortisol in the body increases,negative emotions are aggravated.Investors’ evaluation of things is negatively biased and their desire to take risks decreases.Investors are more conservative and passive in IPO transactions,which ultimately leads to the deterioration of IPOs’ performance.Through fundamental channels,air pollution,news about air pollution and government’s environmental regulations on air pollution have attracted the attention of investors.Investors make predictions on the policy environment,business performance,and future development of the IPO company based on information related to air pollution,which will ultimately affect the performance of the IPO.This article takes all the IPO stocks listed on China’s A-share market from2014 to 2019 as the research object,and selects AQI and the Baidu search index of air pollution-related terms as the proxy variable for air pollution and investors’ attention to air pollution.Through the multiple regression model,this research try to explore whether air pollution affects IPO performance,how air pollution affects IPO performance,and it’s there any difference in the impact of air pollution on environmental protection concept IPOs and non-environmental concept IPOs,polluting industry IPOs and non-polluting industry IPOs.The empirical results show that there is a causal relationship between the two proxy variables of air pollution.Air pollution has caused investors to pay attention to air pollution.The air pollution has a significant negative impact on the performance of IPO.The investors’ attention on air pollution have an impact on the performance of IPO.The impact of air pollution on the IPO performance of environmental protection stocks is significantly better than that of non-environmental protection stocks,shows that air pollution has a significant impact on the fundamentals,which can encourage investors to be more inclined to invest in environmentally-friendly stock IPOs.In order to test the robustness of the empirical results of this paper,the proxy variable of air pollution is replaced by the air pollution level.It shows the same conclusion as the pre-test.This article has certain significance at the academic level.There is a lack of research on the impact of air pollution on individual stocks and IPO markets.This article can enrich the related research on air pollution and the stock market.This article also can provide some enlightenment at the practical level.The attempt that prove air pollution affects investors’ rational analysis,prompting investors to raise the premium of environmentally-friendly stocks in the secondary market for IPOs.If the secondary market premium can reduce the financing cost in the primary market,then air pollution as information is conducive to reduce the financing costs of enterprises in the environmental protection industry,and government may expand this effect by taking measures to increase public awareness of air pollution.