Emerging Industry Development and Information Transmission in Financial Markets: Evidence from China's Renewable Energy

Boqiang Lin () and Minyang Li

Energy Economics, 2023, vol. 128, issue C

Abstract: Financial constraint theory and asset pricing theory elucidate the distinct correlation between equity capital cost and strategic investment from different perspectives, encompassing both the intricate uncertainty of the business environment and the efficacy of transmitting financial market information. The burgeoning development of China's renewable energy industry amidst this complex backdrop provides an exceptional empirical context for investigation. Therefore, we select Chinese renewable energy enterprises as samples, considering both internal perceived and external cognized business environment uncertainty, to examine the role played by these factors in influencing equity cost on strategic investment. The findings reveal that changes in such uncertainties result in a ‘saddle’ characteristic. This insight facilitates a comprehensive comprehension of the information conveyed by fluctuations in equity capital cost within emerging industries, along with its underlying mechanisms and limitations.

Keywords: Renewable energy; Equity capital cost; Strategic investment; Environmental uncertainty; Clean Energy (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:128:y:2023:i:c:s0140988323006904

DOI: 10.1016/j.eneco.2023.107192

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