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Emission trading policy and firm-level carbon disclosure in China: Unveiling the potential of market-based environmental regulation

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Listed:
  • Li, Wei
  • Man, Yuanyuan
  • Liu, Jianing
  • He, Yongda
  • Hu, Yang

Abstract

Corporate compliance with environmental obligations and the cultivation of reputations are intricately tied to the effectiveness of carbon disclosure. The emission trading policy, as a market-based environmental regulatory tool, has the potential to influence the micro-level environmental behavior of businesses. Focusing on China's heavily polluting industries, we employ the double machine learning (DML) method to investigate the impact and mechanisms of market-based environmental regulations on firm-level carbon disclosure in this study. The results demonstrate a significant positive effect of market environmental regulations on voluntary carbon information disclosure, particularly in the realm of low-carbon strategic disclosure. This effect is notably strengthened with increased levels of corporate green innovation and enhanced market competitiveness. Furthermore, the findings from the analysis of heterogeneity highlight the significance of accounting for differences in environmental governance pressure, industry structure, and executive environmental awareness when formulating targeted policy implications.

Suggested Citation

  • Li, Wei & Man, Yuanyuan & Liu, Jianing & He, Yongda & Hu, Yang, 2025. "Emission trading policy and firm-level carbon disclosure in China: Unveiling the potential of market-based environmental regulation," Research in International Business and Finance, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:riibaf:v:79:y:2025:i:c:s0275531925003381
    DOI: 10.1016/j.ribaf.2025.103082
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    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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