Accounting Seminar（2015-03）

Topic:Particles, Pollutions and Prices

Speaker:Oliver Zhen Li (NationalUniversity of Singapore)

Time:Tuesday,10 March, 14:00-15:30 am

Location:Room 217, Guanghua Building 2

Organizer:Department of Accounting,MPAcc GSM, PKU

Abstract：

We investigate whether a sentiment effect arising from poor air quality negatively affects stock prices. We find that the local air quality index (which is increasing in air pollution) relative to that of Beijing negatively affects stock prices. Additional analysis unveils a subsequent reversal in stock prices in response to the relative air quality. Further, the relative air quality index also negatively affects trading volume. Finally, this negative association does not appear to be influenced by economic fundamentals or investor sophistication. In sum, our findings suggest that poor air quality negatively affects stock prices and investor trading activities.

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