Carbon Trading Policy, Mild Greenwashing, and Financial Risk: Evidence from Chinese A-Share Listed Companies

DOI: https://doi.org/10.62517/jel.202614304

Author(s)

Yiran Feng

Affiliation(s)

School of Economics and Management, Wuhan University, Wuhan, Hubei, China *Corresponding Author

Abstract

Against the backdrop of the advancement of the "dual carbon" goals and the carbon emission trading system, enterprises' environmental information is facing structural adjustments driven by both regulation and market forces. Based on the panel data of Chinese A-share listed companies from 2013 to 2023, this paper systematically examines the impact of the carbon trading policy on enterprises' greenwashing behaviors and financial risks by adopting the Difference-in-Differences (DID) method. The results show that the carbon trading policy significantly increases the probability of enterprises engaging in greenwashing behaviors, indicating that enterprises tend to adopt strategic environmental under institutional pressure. Further analysis reveals that greenwashing behaviors have no significant impact on traditional financial indicators such as operating cash flow, profit volatility, and credit risk, which reflects the phased characteristics of the emerging carbon market: currently dominated by "mild greenwashing", the capital market has not yet formed an effective risk pricing mechanism for greenwashing. This paper identifies "mild greenwashing" as an important institutional boundary connecting environmental regulation and market constraints, and provides Chinese empirical evidence for understanding the asymmetric relationship between policy pressure, strategies, and market reactions.

Keywords

Carbon Emission Trading Policy; Greenwashing; Financial Risk; ESG; Difference-in-Differences

References

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