IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v92y2026ics1544612326000759.html

Energy transition and corporate risk-taking

Author

Listed:
  • Fang, Hong
  • Xu, Feng
  • Wang, Xiaohui
  • Pan, Yue

Abstract

Under China’s dual-carbon goals, energy transition has profoundly shaped corporate strategic decision-making, encouraging firms to strengthen their risk-taking capacity in pursuit of green transformation. Using panel data of Chinese-listed companies between 2005 and 2022, this study examines how energy transition impacts corporate risk-taking by integrating city-level energy consumption data with firm-level data. The findings indicate that energy transition significantly enhances corporate risk-taking, with stronger effects observed among non-state-owned enterprises and firms with lower energy consumption. Furthermore, financing constraints and digital transformation amplify the impact.

Suggested Citation

  • Fang, Hong & Xu, Feng & Wang, Xiaohui & Pan, Yue, 2026. "Energy transition and corporate risk-taking," Finance Research Letters, Elsevier, vol. 92(C).
    • Handle: RePEc:eee:finlet:v:92:y:2026:i:c:s1544612326000759
    DOI: 10.1016/j.frl.2026.109544
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612326000759
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2026.109544?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Han, Hongyun & Wu, Shu, 2018. "Rural residential energy transition and energy consumption intensity in China," Energy Economics, Elsevier, vol. 74(C), pages 523-534.
    2. Muhammad Zubair Chishti & Arshian Sharif & Qi Xu & Gagan Deep Sharma, 2024. "Toward sustainable development: Revealing the dynamic impacts of the belt and road initiative on energy transition," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(6), pages 7069-7095, December.
    3. Clausen, Laura Tolnov & Rudolph, David, 2020. "Renewable energy for sustainable rural development: Synergies and mismatches," Energy Policy, Elsevier, vol. 138(C).
    4. Cui, Lin & Wang, Yanshu, 2023. "Can corporate digital transformation alleviate financial distress?," Finance Research Letters, Elsevier, vol. 55(PB).
    5. Gormley, Todd A. & Matsa, David A., 2016. "Playing it safe? Managerial preferences, risk, and agency conflicts," Journal of Financial Economics, Elsevier, vol. 122(3), pages 431-455.
    6. Wang, Ying & Liao, Weixiao & Zhao, Xing & Lian, Peng, 2025. "Energy transition policy and green innovation quality," Finance Research Letters, Elsevier, vol. 73(C).
    7. Jia, Xiao & Lei, Ziyu & Dai, Yunhao & Kong, Dongmin, 2026. "Green mergers and acquisitions: Unveiling the greenwashing motive," Finance Research Letters, Elsevier, vol. 91(C).
    8. Wang, Linjing & Zhao, Chunyan & Gan, Yufei & Ni, Xiaoxiao, 2025. "Financial flexibility, organizational resilience and corporate green innovation," Finance Research Letters, Elsevier, vol. 76(C).
    9. Flammer, Caroline, 2021. "Corporate green bonds," Journal of Financial Economics, Elsevier, vol. 142(2), pages 499-516.
    10. Song, Yang & Pang, Xiaoqian & Zhang, Zhiyuan & Sahut, Jean-Michel, 2024. "Can the new energy demonstration city policy promote corporate green innovation capability?," Energy Economics, Elsevier, vol. 136(C).
    11. Gozgor, Giray & Lau, Chi Keung Marco & Lu, Zhou, 2018. "Energy consumption and economic growth: New evidence from the OECD countries," Energy, Elsevier, vol. 153(C), pages 27-34.
    12. Liu, Changfei & Wu, Qiong & Yang, Zuozhi, 2024. "Population aging and corporate risk-taking," Finance Research Letters, Elsevier, vol. 61(C).
    13. Tian, Guangning & Li, Bo & Cheng, Yue, 2022. "Does digital transformation matter for corporate risk-taking?," Finance Research Letters, Elsevier, vol. 49(C).
    14. Dogan, Eyup & Altinoz, Buket & Madaleno, Mara & Taskin, Dilvin, 2020. "The impact of renewable energy consumption to economic growth: A replication and extension of Inglesi-Lotz (2016)," Energy Economics, Elsevier, vol. 90(C).
    15. Lei, Hao & Gao, Renyuan & Ning, Chutong & Sun, Guanglin, 2025. "Green finance and corporate green innovation," Finance Research Letters, Elsevier, vol. 72(C).
    16. Banerjee, Rajabrata & Gupta, Kartick, 2017. "The effects of environmental sustainability and R&D on corporate risk-taking: International evidence," Energy Economics, Elsevier, vol. 65(C), pages 1-15.
    17. Clarkson, Peter M. & Li, Yue & Richardson, Gordon D. & Vasvari, Florin P., 2008. "Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis," Accounting, Organizations and Society, Elsevier, vol. 33(4-5), pages 303-327.
    18. Charles J. Hadlock & Joshua R. Pierce, 2010. "New Evidence on Measuring Financial Constraints: Moving Beyond the KZ Index," The Review of Financial Studies, Society for Financial Studies, vol. 23(5), pages 1909-1940.
    19. Kose John & Lubomir Litov & Bernard Yeung, 2008. "Corporate Governance and Risk‐Taking," Journal of Finance, American Finance Association, vol. 63(4), pages 1679-1728, August.
    20. Xu, Weidong & Gao, Xin & Xu, Hao & Li, Donghui, 2022. "Does global climate risk encourage companies to take more risks?," Research in International Business and Finance, Elsevier, vol. 61(C).
    21. Wang, Jie & Wang, Wanwan & Yuan, Fang, 2023. "Air pollution and corporate risk-taking: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 570-586.
    22. Qi, Xiaoyan & Guo, Yanshan & Guo, Pibin & Yao, Xilong & Liu, Xiuli, 2022. "Do subsidies and R&D investment boost energy transition performance? Evidence from Chinese renewable energy firms," Energy Policy, Elsevier, vol. 164(C).
    23. Zhao, Rui & Wang, Yining & Lun, Xi & Li, Na & Wang, Rong & Zhang, Yin & Wang, Menglu, 2025. "Enterprise financialization, technological empowerment, and enterprise risk-taking," Finance Research Letters, Elsevier, vol. 74(C).
    24. Wang, Yajun & Yuan, Zheng & Luo, Hanyu & Zeng, Hui & Huang, Junbing & Li, Yulin, 2024. "Promoting low-carbon energy transition through green finance: New evidence from a demand-supply perspective," Energy Policy, Elsevier, vol. 195(C).
    25. Feng, Xiaocui & Yu, Ruiqing, 2025. "How does digital transformation affect corporate risk-taking? Evidence from China," International Review of Economics & Finance, Elsevier, vol. 97(C).
    26. Wen, Fenghua & Li, Cui & Sha, Han & Shao, Liuguo, 2021. "How does economic policy uncertainty affect corporate risk-taking? Evidence from China," Finance Research Letters, Elsevier, vol. 41(C).
    27. Xiaohui Chen & Wen Chen & Xiaoxiang Wang, 2024. "Regional carbon efficiency and corporate risk-taking," Economic Change and Restructuring, Springer, vol. 57(3), pages 1-30, June.
    28. Steven N. Kaplan & Luigi Zingales, 1997. "Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(1), pages 169-215.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Deng, Hong & Li, You & Lin, Yongjia, 2023. "Green financial policy and corporate risk-taking: Evidence from China," Finance Research Letters, Elsevier, vol. 58(PB).
    2. Ma, Luyao & Lv, Xin & Shen, Zhiyang & Yu, Chang & Zhang, Qingyi, 2026. "How green bonds influence corporate environmental behaviour: A heterogeneous analysis," Research in International Business and Finance, Elsevier, vol. 83(C).
    3. Ding, Yibing & Sun, Yining & Zhang, Xiaoou, 2025. "Customer digital transformation and enterprise risk-taking: Evidence from Chinese supply chains," China Economic Review, Elsevier, vol. 91(C).
    4. Chen, Xiaoqiu & Hu, Feng, 2025. "Employee pension welfare and corporate risk-taking: Evidence from the enterprise annuity system in China," Pacific-Basin Finance Journal, Elsevier, vol. 94(C).
    5. Çolak, Gönül & Korkeamäki, Timo, 2021. "CEO mobility and corporate policy risk," Journal of Corporate Finance, Elsevier, vol. 69(C).
    6. Li, Gang & Ma, Yan, 2025. "Labor contract law, labor income share, and corporate risk-taking," Finance Research Letters, Elsevier, vol. 85(PC).
    7. Xu, Yanhui & Deng, Fuhua & Feng, Qianbin, 2025. "The effect of tax enforcement digitalization on corporate digital transformation: Evidence from China's listed companies," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 1105-1134.
    8. Tengjiao Wang & Yichao Liu & Wen Yue, 2026. "When Going Green Pays Off: How Green Factory Accreditation Influences Market Valuation," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 33(2), pages 1932-1953, March.
    9. Keum, Daniel & Meier, Stephan, 2020. "License to Fire? Unemployment Insurance and the Moral Cost of Layoffs," IZA Discussion Papers 13497, IZA Network @ LISER.
    10. Wen, Fenghua & Li, Cui & Sha, Han & Shao, Liuguo, 2021. "How does economic policy uncertainty affect corporate risk-taking? Evidence from China," Finance Research Letters, Elsevier, vol. 41(C).
    11. Tian, Qian & Zhu, Yan & Zhang, Zili, 2024. "The impact of local incentive-based legislation on the financing constraints of private firms–Evidence from China," Finance Research Letters, Elsevier, vol. 68(C).
    12. Ying, Limeng & Bao, Mengqi & Yang, Jie, 2025. "Institutional trust as a catalyst: Government procurement and private firms’ risk-taking in China," Economic Analysis and Policy, Elsevier, vol. 87(C), pages 2437-2457.
    13. Peng, Fei & Zhou, Shibiao & Zhou, Peng, 2023. "Local government fiscal stress and corporate risk-taking: Evidence from a quasi-natural experiment in China," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1677-1695.
    14. Zhang, Ailian & Zhao, Yuxin & Liu, Bai, 2026. "Bank fintech and corporate environmental information disclosure: The role of financial mismatch," Economic Modelling, Elsevier, vol. 156(C).
    15. Wei, Feng & Xie, Huixuan & Yip, Chi Man, 2026. "Environmental regulatory spillovers in conglomerates: Quasi-experimental evidence on subsidiary leverage in China," Finance Research Letters, Elsevier, vol. 88(C).
    16. Hoepner, Andreas G.F. & Schiemann, Frank & Schneider, Fabiola I. & Tietmeyer, Raphael, 2025. "ESG disclosure as advertisement of corporate bond issuances," International Review of Financial Analysis, Elsevier, vol. 106(C).
    17. Zhong, Linfei & He, Yuanqiong, 2025. "The impact of rookie CEOs on corporate risk-taking," International Review of Financial Analysis, Elsevier, vol. 107(C).
    18. Feng, Xiaocui & Yu, Ruiqing, 2025. "How does digital transformation affect corporate risk-taking? Evidence from China," International Review of Economics & Finance, Elsevier, vol. 97(C).
    19. Zhenjie Wang & Jiewei Zhang, 2023. "Nexus between corporate environmental performance and corporate environmental responsibility on innovation performance," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 11645-11672, October.
    20. Japan Huynh, 2026. "Bank competition and corporate risk-taking," Empirical Economics, Springer, vol. 70(1), pages 1-46, January.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:92:y:2026:i:c:s1544612326000759. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.