Climate policy and corporate green transformation: Empirical evidence from carbon emission trading

Lin Liu, Liqun Liu, Kai Liu and Ana Isabel Jiménez-Zarco

Research in International Business and Finance, 2025, vol. 74, issue C

Abstract: The implementation of climate policies in the financial sector is a global consensus among countries committed to sustainable development. Therefore, the impact of carbon trading policy (CTP) on firms’ green transformation (GT) is examined by manually compiling a directory of emission control enterprises in China’s carbon market from 2008 to 2022, using a difference-in-differences model. This topic must be urgently explored through theoretical and empirical studies. This study found that CTP can promote corporate green transformation; however has no industry and regional spillover effects. Mechanism analyses indicate that CTP can promote a firm’s green transformation by enhancing green innovation and environmental, social, and governance (ESG) performance. Heterogeneity analysis reveals that the effect of CTP on GT is effective when firms have higher “greenwash” scores, lower financialization, weaker product market competition, and higher levels of environmental regulation. This study reveals the microeconomic effects of CTP, and the findings provide empirical evidence that China can realize Porter’s hypothesis.

Keywords: Climate policy; Carbon emission trading; Emission reduction incentives; Corporate green transformation; Greenwash (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0275531924004689
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:riibaf:v:74:y:2025:i:c:s0275531924004689

DOI: 10.1016/j.ribaf.2024.102675

Access Statistics for this article

Research in International Business and Finance is currently edited by T. Lagoarde Segot

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