Low-Carbon Transition of Enterprises and Financial Market Stability: From the Perspective of Stock Price Crash Risk

Yuhang Zheng, Jiaying Peng, Xiangzhong Wei and Jing Zhang

Emerging Markets Finance and Trade, 2022, vol. 58, issue 15, 4361-4374

Abstract: This study aimed to assess the effect of corporate low-carbon transition on financial market stability. For this purpose, this study used the panel data of nonfinancial companies listed on China’s A shares from 2007 to 2020, considering stock price crash risk. The results revealed that the low-carbon transition of enterprises intensifies the risk of stock price crashes. The positive correlation between the low-carbon transition of enterprises and the stock price crash risk is more significant for companies lacking environmental information disclosure and green innovation, in addition to companies in high-polluting industries and noncarbon emission pilot areas. The conclusions were confirmed to be robust by introducing other control variables into the model, conducting instrumental variables test, and using the difference-in-differences method.

Date: 2022
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DOI: 10.1080/1540496X.2022.2103403

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