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Climate policy uncertainty and corporate investment efficiency: evidence from China

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  • Zhenhua Zhang
  • Shiqin Cheng
  • Cong Wang
  • Shunfeng Song
  • Yanchao Feng

Abstract

Despite the notable impact of climate policy uncertainty (CPU) on capital markets, there has been a lack of research on how it affects corporate investment efficiency (CIE). To address this gap, using data from 2,605 non-financial listed companies from the Shanghai and Shenzhen stock exchanges between 2009 and 2020, this study identifies the effect of the CPU on the CIE. The results show that the CPU adversely affects the CIE in all industries, and the impact is heterogeneous for firms with different resources, with a more significant influence on non-state-owned, technology-intensive companies, and firms where executives have lower levels of education; whereas firms with higher TFP may increase CIE under CPU. Furthermore, CPU has a considerable adverse influence on CIE by harming corporate governance, without necessarily diminishing free cash flow. The results indicate that firms’ resource endowment has a critical bearing on its CIE under an uncertain policy environment.

Suggested Citation

  • Zhenhua Zhang & Shiqin Cheng & Cong Wang & Shunfeng Song & Yanchao Feng, 2025. "Climate policy uncertainty and corporate investment efficiency: evidence from China," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 68(4), pages 957-977, March.
    • Handle: RePEc:taf:jenpmg:v:68:y:2025:i:4:p:957-977
    DOI: 10.1080/09640568.2023.2276062
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    Cited by:

    1. Tian, Xinci & Ma, Yueyue, 2026. "Digital asset intensity and strategic disclosure effects on firm performance: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 105(C).
    2. Qi, Qiao & Du, Xiaojun & Hou, Yingying & Li, Zhitang, 2025. "Planning a clean future: energy policy communication and energy technology innovation," Energy, Elsevier, vol. 335(C).
    3. 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.
    4. Wu, Jiaying & Yang, Yu, 2025. "Intellectual property protection and corporate investment efficiency: An analysis of the moderating effect based on financial technology transfer," Finance Research Letters, Elsevier, vol. 84(C).
    5. Cheng, Zhonghua & Yang, Guang, 2026. "The impact of artificial intelligence on corporate ESG greenwashing," Socio-Economic Planning Sciences, Elsevier, vol. 103(C).
    6. Chu, Zhongzhu & Tan, Weijie & Ren, Boru & Xia, Zhiyi, 2026. "Assessing the effect of climate policy uncertainty on corporate carbon cost leadership strategy: Evidence from China," Energy Economics, Elsevier, vol. 154(C).
    7. Feng, Yanhong & Liu, Fei & Liu, Hongbo & Xuan, Linlin, 2025. "How does climate policy uncertainty affect the investment efficiency of energy firms?," Finance Research Letters, Elsevier, vol. 86(PE).
    8. Soumya Ranjan Sethi & Dushyant Ashok Mahadik, 2025. "Do Rising Climate Risks Signal Financial Trouble for Food and Agro Based Firms?," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(6), pages 8599-8618, December.
    9. Li, Jingsong & Liu, Anqi, 2026. "New securities law, internal control quality, and corporate investment efficiency," Finance Research Letters, Elsevier, vol. 90(C).
    10. Guo, Chenyu & Zhang, Yiming & Gao, Hao & Wu, Xinkai & Lv, Rongjie, 2025. "Supply chain shareholding, climate policy uncertainty and total factor productivity of enterprises," Finance Research Letters, Elsevier, vol. 85(PB).

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