Emission rights mortgage and stock price crash risk: evidence from China

Qun Wang, Yongliang Zeng and Xiangfang Zhao

Asia-Pacific Journal of Accounting & Economics, 2025, vol. 32, issue 2, 235-250

Abstract: Using the emission rights mortgage (ERM) policy in China as an exogenous shock, we employ a difference-in-differences approach to examine how ERM affects stock price crash risk of heavy-polluting firms. We find that the implementation of the ERM policy reduces stock price crash risk. Heterogeneity analysis reveals that this effect is stronger for firms with more severe financial constraints, those with lower information disclosure quality, those located in regions with greater local government’s environmental concerns, and non-SOEs. Our findings further our understanding of the economic consequences of ERM policy.

Date: 2025
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DOI: 10.1080/16081625.2023.2286978

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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