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How does climate policy uncertainty affect the uncertainty of stock returns of industrial enterprises in typical policy markets? Evidence from China

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  • Zhao, Zexia
  • Sun, Licheng

Abstract

This study used data from Chinese industrial enterprises from 2007 to 2024 as its sample. It finds that climate policy uncertainty leads to uncertainty in the stock return rates of Chinese industrial enterprises. This conclusion remains robust after testing using methods such as the Generalized Causal Forest. Among these, equity pledges serve as a transmission mechanism, while operational fluctuations play a masking effect. Heterogeneity tests reveal that for firms with lower managerial ownership and those under government scrutiny, climate policy uncertainty has a more pronounced promotional effect on stock return uncertainty. This study expands the boundaries of the new institutionalism theory. Furthermore, suggestions were made to adjust the uncertainty of stock returns from the perspective of aligning the interests of managers.

Suggested Citation

  • Zhao, Zexia & Sun, Licheng, 2025. "How does climate policy uncertainty affect the uncertainty of stock returns of industrial enterprises in typical policy markets? Evidence from China," Finance Research Letters, Elsevier, vol. 86(PD).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pd:s1544612325019233
    DOI: 10.1016/j.frl.2025.108669
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