Regional Air Quality and Executive Mobility

Abstract

This thesis examines the impacts of regional air quality on executive mobility in China, positing that poor regional air quality has enduring impacts on executive turnover, thus influencing executives’ career paths and choice of workplace in the long term. Using air quality data from prefecture-level cities and a unique dataset to track executives of listed companies from 2010 to 2018 in China, I find that executives located in polluted areas are more likely to relocate to cities with better air quality after turnover, and with no subsequent observable effects on their salaries. These findings remain robust even after controlling for firm performance as an alternative explanation for executives changing their workplace, using alternative measures for regional air quality, and employing a regression discontinuity design (RDD) to address endogeneity concerns. Moreover, the impacts of regional air quality on executive mobility appear to be more pronounced among executives of non-state-owned listed companies. This suggests that regional air quality significantly influences executive decisions regarding work locations and career trajectories. The study contributes to understanding the effects of brain drain by highlighting how local environmental conditions affect a region’s capacity to retain and attract executive talent in China. Additionally, it provides insights into the decision-making processes related to the choice of location of the firm’s headquarters, talent retention strategies, and environmental regulations. In summary, this research provides a comprehensive insight into the long-term relationship between regional air quality and executive turnover dynamics.