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Carbon neutrality policies and stock price crash risk: Evidence from China

Author

Listed:
  • Wang, Daoping
  • Ji, Zhanghanyu
  • Shen, Xinyan

Abstract

This study investigates the impact of carbon neutrality policies on firm stock price crash risk, based on data of China. Findings reveal that carbon neutrality policies significantly reduce crash risk, with this effect mediated by both carbon emission reductions and alleviation of financing constraints. Moreover, heterogeneity analysis demonstrates that the relationship between carbon neutrality policies and firm stock price crash risk is only significant for firms in low-carbon-emissions industries or firms with low ESG performance and high information transparency. Also, carbon neutrality policies can reduce the risk of stock price crashes only when investor sentiment is low.

Suggested Citation

  • Wang, Daoping & Ji, Zhanghanyu & Shen, Xinyan, 2025. "Carbon neutrality policies and stock price crash risk: Evidence from China," Finance Research Letters, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:finlet:v:81:y:2025:i:c:s1544612325006920
    DOI: 10.1016/j.frl.2025.107432
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    References listed on IDEAS

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    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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