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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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    Cited by:

    1. Huang, Ming & Wang, Xiaoxiao & Wang, Xuewu & Zhang, Qunzi, 2024. "Carbon risk and corporate maturity mismatch," Journal of International Money and Finance, Elsevier, vol. 149(C).
    2. Liao, Tailai & Yan, Jingdong & Zhang, Qiuhong, 2024. "The impact of green technology innovation on carbon emission efficiency: The intermediary role of intellectual capital," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 520-532.
    3. Zhang, Jinlong & Wu, Mingyue & Chen, Tingwei & Gao, Bin, 2024. "Green credit, financing constraints, and corporate investment: From the perspectives of scale and efficiency," The North American Journal of Economics and Finance, Elsevier, vol. 73(C).
    4. Tan, Weijie & Tang, Qiuyu & Sun, Wanting & Du, Xuanyu, 2025. "Unintended consequences: Examining the effects of government digital regulation on corporate fintech innovation in China," Emerging Markets Review, Elsevier, vol. 64(C).
    5. Banerjee, Ameet Kumar & Özer, Zeynep Sueda & Rahman, Molla Ramizur & Sensoy, Ahmet, 2024. "How does the time-varying dynamics of spillover between clean and brown energy ETFs change with the intervention of climate risk and climate policy uncertainty?," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 442-468.

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