Examined the Impact of Air Pollution on Corporate Total Factor Productivity Through Investor Sentiment and Government Attention

Governments have encouraged environmentally sustainable practices within firms to stimulate technological advancements to foster green economic growth. From 2015 to 2024, this investigation evaluated the influence of air pollution on the total factor productivity of A-share listed companies in Shanghai and Shenzhen. It investigated two mechanisms: government attention and investor sentiment. The results indicated a negative correlation between corporate productivity and air pollution, as contaminant emissions impeded efficiency improvements. As a result of environmental concerns, investor sentiment declined, which incited companies to implement more environmentally friendly practices. Furthermore, the government's attention to air pollution resulted in regulatory measures that impacted corporate behavior. The heterogeneity analysis revealed variations in the data based on the enterprise's proprietorship. These discoveries offer policymakers valuable insights into the delicate balance between environmental sustainability and industrial expansion.