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Geopolitical risk and corporate environmental investment

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  • Junkai Wang
  • Lin Zhang
  • Yihan Sun

Abstract

This paper examines the impact of geopolitical risk on corporate environmental investment, focusing on A-share listed companies in China’s Shanghai and Shenzhen stock markets from 2000 to 2022. The study finds that the geopolitical risks currently faced by China have had a negative impact on domestic corporate environmental investment. This adverse effect primarily occurs through mechanisms such as increased market uncertainty, and higher corporate debt costs. Heterogeneity analysis reveals that companies with a higher proportion of executives with environmental backgrounds and those under environmental regulation experience less negative impact on environmental investment when facing geopolitical risks. These findings have significant theoretical and practical implications for corporate managers and policymakers, offering valuable references and guidance for further enhancing corporate environmental investment.

Suggested Citation

  • Junkai Wang & Lin Zhang & Yihan Sun, 2025. "Geopolitical risk and corporate environmental investment," Applied Economics, Taylor & Francis Journals, vol. 57(60), pages 10951-10965, December.
    • Handle: RePEc:taf:applec:v:57:y:2025:i:60:p:10951-10965
    DOI: 10.1080/00036846.2025.2449620
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    Cited by:

    1. Nasha Shafridah Binti Abdullah & Siti Nurhidayah Mohd Roslen & Nur Zahidah Binti Bahrudin & Pang Mary & Siti Nur Nadhirah Binti Mohd Roslen, 2025. "Market Sentiment and Stock Return Volatility in Malaysia: Evidence using the GARCH-X Model," Information Management and Business Review, AMH International, vol. 17(3), pages 394-402.
    2. Huo, Xuehui & Shi, Haiquan, 2025. "Geopolitical risk and ESG rating divergence: Global evidence," Finance Research Letters, Elsevier, vol. 86(PB).
    3. Gao, Pengqun & Wang, Guangyu & Li, Yinxia, 2026. "How can artificial intelligence break through technological blockades? - evidence from China," Finance Research Letters, Elsevier, vol. 90(C).

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