Seeing Is Not Believing: Strategic Pollution Suppression Around Corporate Site Visits

This study examines whether firms strategically “clean up” emissions when investors are watching. Using daily facility-level satellite data from China, we find that manufacturing firms temporarily suppress pollution emissions specifically during investor site visits. The effect is most pronounced among pollution-intensive, high-valuation, and well-governed firms, and is primarily driven by the scrutiny of existing shareholders. Further analysis reveals that firms achieve this reduction by temporarily ramping up abatement equipment rather than suspending production. These findings document a novel form of real activity management where physical signals are endogenously distorted, highlighting the limitations of observed ESG diligence.