American Economic Journal Economic Policy· 2026Q1
Polluted IPOs
- 2citations
- Q1SCImago
- 2026year
Short summary
Chinese firms are 10-15% more likely to pass regulatory IPO review on days with high PM2.5 pollution, driven by reduced reviewer cognitive capacity.
AI-generated from the title and abstract; the full text is not read.
Key points
- Firms are 10-15% more likely to pass IPO review on polluted days (high PM2.5).
- Politically unconnected firms benefit more from polluted review days.
- Pollution reduces reviewer cognitive capacity, leading to fewer/simpler questions.
- Firms approved on polluted days show no significant post-IPO performance difference.
AI-generated from the title and abstract; the full text is not read.
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. (JEL D22, G24, G32, K22, P28, P31, Q52)
The authors' abstract, as published at the source. American Economic Journal Economic Policy, 2026 · DOI ↗
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Field: Strategy and Management
Strategy and ManagementBusiness, Management and Accounting