Corporate carbon emissions and market value

Area of Science:

• Environmental Economics
• Corporate Finance
• Sustainability Studies

Background:

• Global low-carbon governance and China's national goals necessitate balancing economic development with environmental responsibility.
• Enterprises face increasing pressure to align economic benefits with social and environmental contributions.

Purpose of the Study:

• To empirically examine the impact of corporate carbon emissions on firm value in China.
• To investigate the mechanisms through which carbon emissions affect firm value.
• To identify factors that exacerbate or mitigate this relationship.

Main Methods:

• Analysis of non-financial A-share listed companies on Shanghai and Shenzhen stock exchanges (2008-2018).
• Utilized difference-in-differences, instrumental variable analysis, and placebo tests for robustness.
• Mechanism analysis explored effects on risk-taking, market competitiveness, and investor shareholding.

Main Results:

• A significant negative correlation was found between corporate carbon emissions and firm value.
• Carbon emissions reduce firm value by decreasing corporate risk-taking, product market competitiveness, and green investor shareholding.
• The negative impact is more pronounced in firms with high agency costs, earnings management, and poor CSR performance.

Conclusions:

• Corporate carbon emissions pose a direct financial risk to firm value in the Chinese context.
• Understanding these risks is crucial for expanding research on the economic consequences of carbon emissions.
• Firm-specific characteristics, such as agency costs and CSR performance, significantly moderate the relationship between carbon emissions and firm value.