Air Pollution Pressure and Corporate Carbon Efficiency: Evidence from China’s A-share listed Firms

Abstract

In the context of intensifying global climate action and regional environmental governance, advancing green transformation in the corporate sector has become a key pathway to sustainable development. This study focuses on China’s A-share listed firms and constructs a firm-level carbon emission efficiency (CEE). By integrating satellite-derived PM2.5 pollution data, we employ a difference-in-difference (DID) model to examine whether regional air pollution control pressure induces firms to enhance their carbon emission efficiency. Leveraging the policy context following the enforcement of the Paris Agreement, we define firms located in cities with a significant reduction in PM2.5 as the treatment group, while others serve as the control. This design allows for the identification of incentive effects generated by environmental governance policies. The preliminary results suggest that improvements in air quality significantly encourage green production behaviors among firms, with declining pollution levels resulting in notable gains in carbon emission efficiency. This study offers micro-level evidence on how regional environmental pressure interacts with corporate environmental performance, contributing to the understanding of incentive mechanisms under air governance. It also provides policy insights for promoting differentiated, targeted emission reduction strategies and supporting corporate low-carbon transitions at the local level.