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Does carbon risk amplify environmental uncertainty?

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  • Gao, Bin
  • Zhang, Jinlong
  • Liu, Xiaofeng

Abstract

This paper uses the Carbon Emissions Trading (CET) as a quasi-natural experiment to empirically test the impact of carbon risk on enterprise environmental uncertainty from the perspective of policy regulation in China. Using data from A-share listed enterprises from CET-covered enterprises, this paper uses multiphase difference-in-differences (DID) strategy and finds that carbon risk amplifies the uncertainty of the enterprise environment. The test of the intermediary effect indicates that institutional ownership and the change of the shareholding ratio of the largest shareholder play a partial intermediary role between carbon risk and environmental uncertainty. In addition, the analysis of industry and enterprise heterogeneity reveals that the impact is more significant on enterprises in the oil industry, enterprises with high financing constraints and insufficient investment, and non-state-owned enterprises.

Suggested Citation

  • Gao, Bin & Zhang, Jinlong & Liu, Xiaofeng, 2023. "Does carbon risk amplify environmental uncertainty?," International Review of Economics & Finance, Elsevier, vol. 88(C), pages 594-606.
    • Handle: RePEc:eee:reveco:v:88:y:2023:i:c:p:594-606
    DOI: 10.1016/j.iref.2023.06.037
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    8. Li, Jinglong & Dai, Wei, 2025. "The impact of economic policy uncertainty on controlling shareholder tunneling behavior and governance mechanisms," Finance Research Letters, Elsevier, vol. 82(C).

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