Assessing capital allocation efficiency under environmental regulation

Ting Wang, Jian Tang, Xiao Wang and Qiankun He

Finance Research Letters, 2024, vol. 62, issue PA

Abstract: Utilizing data from 2010 to 2021 from listed firms, this study examines the relationship between environmental regulation and capital allocation efficiency. The empirical findings reveal that the implementation of carbon emissions trading scheme pilots plays a pivotal role in diminishing capital misallocation within firms. This effect is more pronounced in state-owned enterprises, firms facing high financial constraints, those operating in highly competitive markets, and organizations that are not part of the high-tech or high-pollution industries. These findings highlight the significant role of macro-level environmental regulations in improving micro-level organizational capital efficiency.

Keywords: Capital misallocation; Environmental regulation; Carbon emissions trading (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:62:y:2024:i:pa:s154461232400134x

DOI: 10.1016/j.frl.2024.105104

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