<p>Grounded in agency theory and behavioral finance theory, this study investigates the impact of air pollution on stock price crash risk using a sample of Chinese A-share listed companies from 2014 to 2021. Our empirical analysis demonstrates a significant positive association between air pollution and stock price crash risk. Specifically, the detrimental effects of regional air pollution on the physical and mental health of individuals, as well as on corporate operations, are reflected in stock prices, ultimately increasing crash risk. Mediation analysis indicates that air pollution influences stock price crash risk by aggravating agency problems, reducing investors’ attention and strengthening government regulation. Moreover, our study highlights the moderating role of external governance mechanisms, demonstrating that superior audit quality, more analyst following and more media reports can effectively mitigate the impact of air pollution on stock price crash risk. These findings underscore the importance of external governance in addressing agency problems and alleviating the negative economic externalities associated with air pollution. This research contributes to the understanding of the adverse economic effects of air pollution at the micro-enterprise level and offers valuable insights for promoting coordinated economic and environmental development.</p>