Effects of air pollution on corporate charitable donations: evidence from China
Yanjie Wu, Kun Li, Guanhao Yao, Zengfu LiPurpose
This paper aims to examine the impact of air pollution on corporate charitable giving by combining listing data from the China Stock Market and Accounting Research Database (CSMAR) and data on air pollution in Chinese cities. Using the instrumental variable method and regression discontinuity design, it explores the impact of air pollution on corporate charitable donations and further explores the impact of air pollution on state-owned enterprises and enterprises in high-pollution industries.
Design/methodology/approach
Using 2013–2019 data from Chinese listed firms and air quality indices, this study examines air pollution as a new influence factor. To address omitted variable bias, regressions include industry/year fixed effects, regional economic controls and corporate governance variables. Endogeneity concerns are mitigated via three tests: an instrumental variable (thermal inversion) for reverse causality, a regression discontinuity test and a Huai River policy placebo test – all yielding robust results.
Findings
Empirical results show air pollution significantly reduces corporate charitable donations: a 10% pollution increase correlates with an approximately 30% decrease in corporate charitable donations. These findings hold after robustness checks (excluding air quality index (AQI) manipulation, alternative measures and first-tier cities). Effects are heterogeneous: SOEs and firms in highly polluting industries exhibit greater donation reductions under severe pollution.
Originality/value
This paper adds to the literature by examining the influence of air pollution – a natural factor – on corporate charitable donations, an area that has been largely overlooked in favor of social factors like strategy, politics, altruism and managerial self-interest. It is possibly the first to explore this connection, offering a more holistic view of what drives corporate giving. Given the severity of air pollution in China and its potential to affect firm behaviors and reputation, this study is particularly timely, providing insights into whether and how air pollution might reduce corporate donations, which are critical for enhancing a firm’s image and value.