The impact of sustainable cities construction on foreign divestment: Empirical evidence from low-carbon city pilot in China

Qing-rui Yu and Yan-chen Cheng

Finance Research Letters, 2025, vol. 82, issue C

Abstract: This article is focused on the causal effect of sustainable cities construction on foreign divestment in a quasi-natural experimental setting by leveraging the staggered pilots of low-carbon city in China. We analyse this problem by utilizing prefecture-level cities and Chinese A-share listed companies from 2004 to 2022. Our main result is that LCCP reduces foreign divestment. Notably, the effects are significant only in service-oriented and non-resource-based cities. We demonstrate that mechanisms such as promoting the digital transformation in cities and green technology innovation in enterprises can account for the effect.

Keywords: Low-carbon city pilot; Foreign divestment; Environmental regulation; Staggered DID (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:82:y:2025:i:c:s1544612325008189

DOI: 10.1016/j.frl.2025.107559

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