 How Does Carbon Regulatory Policy Affect Debt Financing Costs? Empirical Evidence from ChinaY.-S. Ren, Sabri Boubaker, P.-Z. Liu and O. Weber Post-Print from HAL Abstract: This study aimed to examine the effect of Chinese carbon regulatory policy on the debt financing costs of carbon-intensive corporations. We use a large sample covering the years between 2005 and 2018. The results of the difference-in-differences approach show that creditors increased debt financing costs for carbon-intensive corporations considerably due to the low-carbon policy, hence decreasing these corporations' profitability and value. Additional analyses show that the dynamic policy effect gradually increased from 2010 on and weakened later in 2015 owing to China's economic slowdown and the local stock market crash. The impacts of low-carbon policies on corporate debt financing costs are more pronounced for state-owned corporations and those with low analyst followings. Our findings provide corporations and governments with crucial insights into mitigating climate transition risk. \textcopyright 2023 Board of Trustees of the University of Illinois Keywords: Agency problems; Carbon regulatory policy; Cost of debt; Debt financing; Difference-in-Differences model (search for similar items in EconPapers) Published in Quarterly Review of Economics and Finance, 2023, 90, pp.77-90. ⟨10.1016/j.qref.2023.05.006⟩ There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04435562 DOI: 10.1016/j.qref.2023.05.006 Access Statistics for this paper More papers in Post-Print from HAL |
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