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Active adaptation or short-run profit pursuing? Carbon emissions trading and corporate financialization: evidence from Chinese listed companies

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Abstract

As an important environmental regulation policy, carbon emissions trading (CET) undoubtedly brings significant pressure to enterprises. However, its impact on corporate investment, particularly its financialization tendency, has been rarely studied. Based on panel data of listed companies and the difference-in-differences (DID) model, this study examines the impact of CET on corporate financialization and its mechanism. The results show that after the short-run profit pursuing motivations dominate and promote corporate financialization. Heterogeneity analysis and mechanism testing results indicate that the strengthening effect is mainly manifested in non-state-owned enterprises, small and medium-sized enterprises, polluting enterprises, and high-profit enterprises. In addition, quota auctions and government intervention can significantly suppress the corporate financialization. Therefore, the government needs to fully consider the influence of corporate heterogeneity and carry out differentiated CET policies. The trading system should be adjusted promptly and scientifically according to the actual circumstances. At the same time, the government can consider adopting measures such as subsidies to alleviate the financing problems of enterprises, thereby encouraging technological innovation and promoting sustainable development.

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Data availability

The data used have been extracted from publicly accessible databases, as indicated in the manuscript.

Notes

  1. Chairman Xi Jinping, in the third point of his speech, stated, “China will adopt more robust policy measures to expand the scope of national autonomous contributions.” Furthermore, specific timelines for achieving carbon peaking and carbon neutrality were proposed.

  2. https://www.mee.gov.cn/ywdt/xwfb/202107/t20210714_846936.shtml.

  3. http://www.gov.cn/xinwen/2018-07/03/content_5303119.htm.

  4. In Chap. 10, Sect. 1 of the report, titled “Accelerating the Green Transformation of Development Patterns.”

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Acknowledgements

The National Natural Science Foundation of China [Grant Nos. 71991482, 42001257] and the Planning Project of Philosophy and Social Sciences in Shanxi Province [Grant No. 2021YJ021] provide funding for this research.

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Authors and Affiliations

  1. Collaborative Innovation Center for Resource-based Economy Transformation, Shanxi University of Finance and Economics, Taiyuan, 030006, China

    Jun Shen, Meng Xu & Xiuli Liu

  2. Graduate School, Shanxi University of Finance and Economics, Taiyuan, 030006, China

    Yuechao Zhao

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  1. Jun Shen
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  2. Meng Xu
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  3. Xiuli Liu
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  4. Yuechao Zhao
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Contributions

J.S: Conceptualization, Methodology, Writing-Original Draft, Writing-Reviewing and Editing. M.X: Data curation and Investigation. X.L: Conceptualization, Methodology and Writing-Reviewing. Y.Z: Data curation and Methodology.

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Correspondence to Jun Shen.

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Shen, J., Xu, M., Liu, X. et al. Active adaptation or short-run profit pursuing? Carbon emissions trading and corporate financialization: evidence from Chinese listed companies. Environ Dev Sustain (2024). https://doi.org/10.1007/s10668-024-04708-0

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