The Impact of Low-Carbon Transition on Accounting Conservatism of High-Carbon-Emission Enterprises: Evidence from China

As climate change challenges intensify, the low-carbon transition has emerged as a fundamental structural transformation reshaping the global economic system and promoting sustainable development. In China, the “Dual Carbon” goals announced in September 2020 represent a landmark policy shift that imposes substantial environmental and regulatory pressure on high-carbon-emission enterprises. Against this backdrop, understanding how firms are adjusting their financial reporting practices to align with the low-carbon transition holds considerable significance for fostering their long-term sustainable development. Unlike previous studies that primarily attributed accounting conservatism to firm-specific risks or general economic uncertainty, this paper views the low-carbon transition as a structural institutional shock that reshapes firms’ external governance environment and information conditions, thereby offering a policy-driven explanation for accounting conservatism. Analysis using the Difference-in-differences method demonstrates that the low-carbon transition significantly enhances accounting conservatism among these enterprises (coefficient = 0.008, t = 4.13). Furthermore, mechanism analysis reveals that the low-carbon transition increases accounting conservatism through financing constraints and media attention. Heterogeneity analysis further indicates that the relationship between the low-carbon transition and accounting conservatism is more pronounced in non-state-owned enterprises, firms located in the eastern region, those facing intense industry competition, and companies with low levels of green innovation. Overall, the findings suggest that accounting conservatism is shaped not only by firm-level factors but also by large-scale institutional and policy transitions. By emphasizing that environmental regulation is a structural determinant of financial reporting behavior, this study extends the accounting conservatism literature. Furthermore, it demonstrates that improving financial reporting quality and risk identification capabilities enhances firms’ ability to address the challenges of the low-carbon transition, thereby fostering their long-term sustainable development.