The prices of European‐style derivative warrants in Hong Kong are generally higher than those of identical American‐style options. We show that liquidity differences have strong explanatory power for this overpricing behavior, especially for low moneyness and long‐term derivatives. Other causative factors include counterparty credit risk, investor preference, information asymmetry, volatility discovery, exercise style, market makers' behavior, and investor sentiment. We also find a big gap in market‐wide liquidity between the two markets. Specifically, lower liquidity results in the weaker efficiency of the options market compared with the derivative warrants market.

This paper exploits a quasi-natural experiment in China, the environmental protection tax reform, to examine the effect of environmental regulation on corporate green investment. Based on Chinese listed company data and the multi-period DID method, we find the enhancement of environmental regulation harms corporate green investment in a short time, and green investments in the treatment group were reduced by 19.57 million (RMB) on average. Further exploring and examining the potential mechanisms of the above effect, we find the above effect is caused by the suppression effect of financing constraints and the crowding-out effect of research and development (R&D) expenditures. We also analyze the heterogeneity of enterprise ownership, enterprise size, and enterprise location, and find that non-state-owned enterprises, small-sized enterprises, and enterprises in the eastern region will experience a greater reduction in green investment when environmental regulation is enhanced. Based on the above findings, we put forward corresponding policy recommendations.