Gone with the wind: An externality of earnings pressure

Zheng Liu, Hongtao Shen, Michael Welker, Ning Zhang*, Yang Zhao

*Corresponding author for this work

Research output: Contribution to journalJournal articlepeer-review

47 Citations (Scopus)


We investigate an externality of earnings pressure from capital markets. We define earnings pressure as managers’ incentives to meet or beat earnings expectations. Using detailed establishment-level sulfur dioxide emission data from China covering 2003 to 2012, we find that firms with earnings pressure have higher intensity sulfur dioxide emissions. This effect is more pronounced when the strength of monitoring and regulatory enforcement is weak, when litigation risk is low, and when the public firm is not mandated to issue a corporate social responsibility report. Our study sheds light on how financial goals may conflict with environmental goals, and has important implications for academics, regulators and society.

Original languageEnglish
Article number101403
Number of pages21
JournalJournal of Accounting and Economics
Issue number1
Early online date16 Mar 2021
Publication statusPublished - Aug 2021

Scopus Subject Areas

  • Accounting
  • Finance
  • Economics and Econometrics

User-Defined Keywords

  • Earnings pressure
  • Capital markets
  • Externalities
  • Economic growth
  • Pollution
  • Environment


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