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How does climate policy uncertainty shape corporate investment behavior?

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  • Zhao, Lili
  • Ma, Yibing
  • Chen, Na
  • Wen, Fenghua

Abstract

In the context of global carbon emission reduction, the uncertainty brought by climate policy would affect the corporate investment behavior. Our study explores the impact of climate policy uncertainty on corporate investment by using a sample of Chinese A-share listed companies in Shanghai and Shenzhen from 2008 to 2022. We find that when climate policy uncertainty increases, the corporate investment will decrease, with state-owned enterprises and high-carbon-emitting companies being more significantly affected. In addition, the mechanism analysis indicates that managerial climate attention and good ESG ratings can mitigate the negative impact of climate policy uncertainty on the corporate investment. Furthermore, major public emergency as the COVID-19 pandemic significantly amplifies the effects of climate policy uncertainty to corporate investment. Our results remain valid after a series of robustness tests, providing insights for corporate investment behavior in the face of climate policy uncertainty.

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  • Zhao, Lili & Ma, Yibing & Chen, Na & Wen, Fenghua, 2025. "How does climate policy uncertainty shape corporate investment behavior?," Research in International Business and Finance, Elsevier, vol. 74(C).
    • Handle: RePEc:eee:riibaf:v:74:y:2025:i:c:s0275531924004896
    DOI: 10.1016/j.ribaf.2024.102696
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    Cited by:

    1. Martin Kamau Muchiri & Szilvia Erdei-Gally & Maria Fekete-Farkas, 2025. "Nexus Between Green Financing and Carbon Emissions: Does Increased Environmental Expenditure Enhance the Effectiveness of Green Finance in Reducing Carbon Emissions?," JRFM, MDPI, vol. 18(2), pages 1-22, February.
    2. Haoyang Lu & Alistair Hunt, 2025. "Towards Sustainability: How Does Climate Policy Uncertainty Affect Regional Green Innovation in China?," Sustainability, MDPI, vol. 17(7), pages 1-27, March.

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