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Carbon emission trading scheme and green investor entry: Evidence from China

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  • Luo, Zijun
  • Liu, Yue
  • Xu, Weidong

Abstract

The carbon emission trading scheme (ETS) is one of the most important market-incentive green finance policies aimed at mitigating carbon emissions. Employing the staggered implementation of the Chinese carbon ETS across regions and a triple difference approach, we find that carbon ETS has a significantly positive impact on green investor entry. This finding is further verified through dynamic effect analysis and stacked regression. The positive effect of carbon ETS on green investor entry is driven by improved green performance, intensified media coverage, and enhanced environmental disclosure. Furthermore, this effect is more pronounced when firms have higher analyst following, lower financial constraints, lower product pricing power, and are located in regions with higher levels of green finance development. Overall, our findings provide insightful implications for the construction of a unified national carbon ETS in emerging markets.

Suggested Citation

  • Luo, Zijun & Liu, Yue & Xu, Weidong, 2025. "Carbon emission trading scheme and green investor entry: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 91(C).
    • Handle: RePEc:eee:pacfin:v:91:y:2025:i:c:s0927538x25000642
    DOI: 10.1016/j.pacfin.2025.102727
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    2. Xiaoxia Jia & Runrun Zhang, 2025. "The Impact of Green Investor Entry on the High-Quality Development of Manufacturing Enterprises," Sustainability, MDPI, vol. 17(21), pages 1-24, October.
    3. Guanyan Lu & Bingxiang Li, 2025. "Artificial Intelligence and Green Collaborative Innovation: An Empirical Investigation Based on a High-Dimensional Fixed Effects Model," Sustainability, MDPI, vol. 17(9), pages 1-41, May.

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    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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