Public environmental concern, CEO turnover, and green investment: Evidence from a quasi-natural experiment in China

Highlights: • Public environmental concern (PEC) affects business decision-making. • We study the "PM2.5 off the chart" extreme event in China at the end of 2011. • We study this quasi-natural experiment with the difference-in-differences model. • PEC increases CEO turnover for heavy-polluting businesses. • Hence, PEC increases green and ecological investment. We investigate the impact of public environmental concern (PEC) on corporate green investments from the perspective of CEO turnover using the extreme event of PM 2.5 surge at the end of 2011 in China as a quasi-natural experiment. Compared with non-heavily polluting companies, the probability of CEO turnover in heavily polluting ones has significantly increased amid the surge of PEC. Heavily polluting companies ease the pressure by increasing green investment. In addition to the hard regulative measures such as environmental regulations, the PEC as a form of soft regulation also makes corporate management more focused on environmental responsibility.