Will the China's carbon emissions market increase the risk-taking of its enterprises?

Lin, Boqiang; Wu, Nan

doi:10.1016/j.iref.2021.10.005

Cited by 34 publications

(6 citation statements)

References 33 publications

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“…Ref. [75] documented that China's carbon market will upsurge the level of corporate risk-taking of engaged enterprises. Ref.…”

Section: Sovereign Environmental Performancementioning

confidence: 99%

Examining the Quadratic Impact of Sovereign Environmental, Social, and Governance Practices on Firms’ Profitability: New Insights from the Financial Industry in Gulf Cooperation Council Countries

Athari,

Saliba,

Abboud

et al. 2024

Sustainability

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The present study particularly aims to probe the quadratic effects of the combined and individual sovereign environmental, social, and governance (ESG) activities on the banking sector’s profitability. Furthermore, we attempt to shed light on the channels through which sovereign ESG practices impact the banking sector’s profitability. Unlike the vast majority of prior works that investigated the sustainability practice–firms’ profitability nexus from the firm level, this study originally probes this relationship from the country level by considering the sovereign ESG sustainability activities. To attain this purpose, we focus on banking sectors operating in Gulf Cooperation Council (GCC) economies and employ the panel-fixed effects and panel-corrected standard errors approaches between 2000 and 2022. Remarkably, the findings uncover that the nexus between combined sovereign ESG and profitability is a non-linear and inversed U-shape (concave), implying that investing in sovereign ESG enhances the banking sector’s profitability. However, after exceeding an inflection point (0.349), its effect turns out to be negative and it develops into activities of destruction. Furthermore, the findings underscore that the association between individual sovereign environmental responsibility and the banking sector’s profitability is a non-linear U-shape (convex), while an inversed U-shaped (concave) nexus is uncovered for the individual sovereign social and governance activities. Moreover, the significant non-linear inverted U-shape for the combined sovereign ESG–stability nexus corroborates that financial stability is a channel through which sovereign ESG significantly impacts profitability.

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“…Ref. [75] documented that China's carbon market will upsurge the level of corporate risk-taking of engaged enterprises. Ref.…”

Section: Sovereign Environmental Performancementioning

confidence: 99%

Examining the Quadratic Impact of Sovereign Environmental, Social, and Governance Practices on Firms’ Profitability: New Insights from the Financial Industry in Gulf Cooperation Council Countries

Athari,

Saliba,

Abboud

et al. 2024

Sustainability

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“…(2020) reported that the increased risk of financial distress due to increased carbon risk could lead to a reduction in financial leverage. Lin and Wu. (2022) concluded that carbon trading policy would increase the corporate risk-taking level of firms involved.…”

Section: Open Access Edited Bymentioning

confidence: 99%

Impact of carbon trading policy on corporate capital structure: Empirical evidence from China

Zhang

Liao

et al. 2023

Front. Environ. Sci.

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Introduction: The Chinese government has taken the lead in proposing a carbon trading market policy to address the negative impact of excessive carbon emissions on global climate change. Since this policy’s implementation in 2011, it has had a profound impact on economic development and the structure of the national economy. In this context, we aim to study how environmental regulation and transition risks associated with climate change affect corporate capital structure.Methods: Based on data provided by listed companies in China’s energy-intensive sector, this study uses a Difference-in-Difference (DID) model to examine the effect of the carbon trading policy on corporate capital structure.Results: According to our results, we predict that the carbon trading policy will significantly reduce the corporate debt ratio, which remains true even when an instrumental variables approach is used to account for endogeneity and after robustness tests are conducted. This study also shows that the negative effect of the carbon trading policy on corporate capital structure is mainly a product of internal capital demand and external capital supply. In addition, the reduction effect that the carbon trading policy has on the corporate debt ratio is more significant among firms with lower government subsidies and among nonstate-owned firms.Discussion: These findings imply that under the implementation of a carbon trading market policy, firms’ financial decision-making will change significantly in response to the policy-induced shocks of elevated corporate risk behaviour.

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“…In this study, an improved genetic algorithm is proposed for the risk analysis of carbon emissions. Firstly, the improved genetic algorithm is used to search for the optimal solution to ensure the solution of the multi-objective combinatorial optimization problem with the lowest resource cost and the highest environmental benefit; The feasible solution obtained is evaluated by the evaluation index system; finally, the reliability of the algorithm proposed in this study is verified by experiments, and the analysis of the impact of carbon emission on the environment is judged [8].…”

Section: Situation Analysismentioning

confidence: 99%

Carbon emission risk prediction based on improved genetic algorithm

Sun

Tian

Jiang

et al. 2023

International Conference on Geographic Information and Remote Sensing Technology (GIRST 2022)

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The issue of environmental risks caused by carbon emissions has become an important content of attention. The multi-objective optimization problem of minimizing the incremental cost of input and maximizing the incremental benefit obtained is related to the development of carbon emissions to the environment. Aiming at this problem, this paper proposes a carbon emission optimization scheme based on an improved genetic algorithm to maximize environmental value in multi-objective problems. First, in order to better reflect the efficiency of pollution caused by carbon emissions, the improved genetic algorithm is used to obtain multiple pareto solutions under the combined optimization of different transformation schemes; Secondly, the gain obtained by unit incremental cost is used as the evaluation index; Finally, through experimental verification, it can be seen that the algorithm proposed in this study has certain advantages. At the same time, in terms of environmental risks caused by carbon emissions, it is not necessary to select all the transformation schemes. Better results can be obtained by optimizing them according to actual conditions.

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Will the China's carbon emissions market increase the risk-taking of its enterprises?

Cited by 34 publications

References 33 publications

Examining the Quadratic Impact of Sovereign Environmental, Social, and Governance Practices on Firms’ Profitability: New Insights from the Financial Industry in Gulf Cooperation Council Countries

Examining the Quadratic Impact of Sovereign Environmental, Social, and Governance Practices on Firms’ Profitability: New Insights from the Financial Industry in Gulf Cooperation Council Countries

Impact of carbon trading policy on corporate capital structure: Empirical evidence from China

Carbon emission risk prediction based on improved genetic algorithm

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