How does carbon emissions trading policy affect accrued earnings management in corporations? Evidence from China

Wenbin Long, Xin Qu and Saifeng Yin

Finance Research Letters, 2023, vol. 55, issue PA

Abstract: This paper examines the impact of carbon emissions trading scheme (ETS) on firms’ accrued earnings management. Based on Chinese A-share listed firms from 2008 to 2020, we find that emission-regulated firms significantly engage in accrued earnings management after implementing ETS. The impact is strengthened for firms with a lower cost pass-through ability and firms with a higher carbon emissions intensity. The results from mechanism analysis support that firms are motivated to manage earnings by the compliance costs and carbon risks associated with the new environmental regulation. Insights are provided into the potential downside consequence of the carbon emission trading policy.

Keywords: Carbon emissions trading; Environmental regulation; Earnings management; Accounting accruals; Difference-in-differences (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612323002131
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:55:y:2023:i:pa:s1544612323002131

DOI: 10.1016/j.frl.2023.103840

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().