Research On The Impact Of Listed Companies’s Carbon Performance On Cost Of Equity Capital Under Carbon Trading Mechanism

The huge carbon emissions from corporate activities are the most important cause of climate change,so all countries need to develop plans and policies to control corporate carbon emissions,thus,China proposes to achieve "carbon neutrality" by 2060.In this low-carbon context,enterprises should actively carry out energy saving and emission reduction,but any enterprise has its own interests as the ultimate goal of economic activities,and to achieve the goal of low-carbon emissions,enterprises need to invest in additional treatment costs and research and development costs for technological and environmental protection upgrades,which will make the enterprise’s behavior to improve carbon performance contradict with the goal of maximizing their own interests,so enterprises need an economic Therefore,companies need an economic incentive to compensate for the cost of governance and R&D,so that managers can voluntarily improve their carbon performance.The magnitude of the cost of equity capital,as the price paid by firms for equity financing,is part of the concern of corporate managers.Thus,by studying the correlation between corporate carbon performance and the cost of equity capital,this paper can provide corresponding support and motivation for corporate managers to actively implement carbon reduction efforts.Meanwhile,the domestic carbon trading mechanism was piloted in seven provinces and cities in 2011,under which carbon credits can be traded at a price,with the aim of further promoting carbon emission reduction by market mechanisms;the difference in the nature of property rights also makes the managers’ motivation and purpose of carbon emission reduction different.Therefore,based on the above research,this paper adds carbon trading mechanism and property rights nature as moderating variables.This paper investigates the correlation between carbon performance and cost of equity capital of domestic listed enterprises,and adds two moderating variables,carbon trading mechanism and nature of property rights.This paper mainly uses literature research method and empirical analysis method,and first conducts a literature review based on carbon trading mechanism,carbon performance,cost of equity capital and their relationships,and puts forward the corresponding four hypotheses.In the empirical analysis,this paper selects samples from domestic A-share listed companies from 2016-2020,and constructs a multiple regression model with carbon performance as the independent variable,cost of equity capital as the dependent variable and many control variables,in order to deeply investigate the correlation between carbon performance and cost of equity capital.Then,we grouped the samples according to the carbon trading mechanism and the nature of property rights,and substituted them into the regression model to verify the correlation between carbon performance and cost of equity capital in different sample groups.In the robustness check,the model is tested by replacing the dependent variable,cost of equity,with the cost of capital,to see whether the regression results change significantly.After the empirical analysis,the following conclusions are drawn:i.Carbon performance has a significant negative correlation with the cost of equity capital,and the correlation is sustainable,indicating that enterprises can obtain relatively lower equity financing costs when they improve their carbon performance,and this economic benefit exists in the long run;ii.The negative correlation of carbon performance on the cost of equity capital is more pronounced for firms in the pilot area of the carbon trading mechanism compared with those in the non-pilot area,indicating that the implementation of the carbon trading mechanism can encourage firms to be more active in carbon emission reduction by further reducing the cost of equity financing;third,the negative correlation of carbon performance on the cost of equity capital is stronger for private firms compared with state-owned firms,indicating that private firms are more motivated to conduct carbon emission reduction and obtain better economic results.Finally,based on the general environment of carbon emission reduction and combined with the research findings,this paper gives appropriate suggestions to relevant policy departments and enterprise managers.