Investment efficiency of renewable energy enterprises when exposed to air pollution: Evidence from China

Previous research has focused on the impacts of air pollution on individual health and economic development, but has not considered its impacts on the investment efficiency of renewable energy enterprise (IERE). Therefore, this paper empirically analyzes the impact of air pollution on IERE using panel data for 200 non-hydroelectric renewable energy (RE) firms listed on China's A-share market from 2008 to 2021. This study shows that air pollution improves investment efficiency by mitigating under-investment in wind and photovoltaic enterprises. This effect is not significant in biomass energy enterprises. Investor attention and enterprise environmental engagement are the mechanisms by which air pollution improves IERE. In addition, the impact of air pollution on IERE is higher for state-owned enterprises, companies with environmentally background executives, areas with less market segmentation, and areas with higher levels of environmental justice. RE policies and media attention can increase the positive impact of air pollution on IERE. This study clarifies the relationship between air pollution and IERE, and highlights important implications for improving the RE policy system and informing corporate investment decisions.