Research On The Impact Of Carbon Trading On Corporate Financial Performance

As the country with the largest greenhouse gas emission in the world and one of the parties to the Paris Agreement,the task of reducing carbon emission control is imminent.In order to achieve emission reduction targets,China began to establish carbon emission right trading pilot markets in seven regions including Shenzhen,Beijing,and Hubei since2013.It has been some time since the introduction of the carbon emissions trading mechanism,but the time limit for reaching the carbon peak in 2030 has begun to count down.In the 14 th Five-Year Plan,China put forward energy conservation and emission reduction targets and pointed out that the emission reduction policy mechanism should be improved to ensure the continuous improvement of ecological environment quality.As a marketoriented environmental regulation,the carbon emission trading mechanism has its significance in energy conservation and emission reduction,but the discussion on its economic consequences has been a hot research topic.Porter Hypothesis holds that proper and strict environmental policies can make enterprises gain more innovation advantages,thus promoting the improvement of corporate performance.Later,Strong Porter Hypothesis proposed that appropriate environmental policies can directly improve the performance of enterprises.So,can carbon emission trading in China achieve the purpose of promoting the development of enterprises?Therefore,this paper attempts to explore whether the Strong Porter Hypothesis can be tested in the institutional environment of China.Based on the externality theory,property rights theory,emissions trading theory,and stakeholder theory,this paper examines the impact of the carbon emissions trading mechanism on firms’ short-term and longterm financial performance and the moderating effect of carbon market liquidity on the relationship between carbon emissions trading and firms’ financial performance,using the propensity score matching method(PSM)and the double difference method(DID),based on A-share listed companies in China from 2010 to 2020.It is found that although the carbon emission trading mechanism inhibits the growth of short-term financial performance,it has a significant positive impact on long-term financial performance,and this impact is more significant as the liquidity of the carbon market increases.The above conclusions are still valid after the robustness test,which verifies the credibility of the Strong Porter Hypothesis in the context of China’s institutional background."Green water and green mountains are the golden hills and silver mountains",which means that the improvement of the environment can bring economic development.The results of this study,on the one hand,can provide evidence for China’s relevant government departments to improve the market-oriented emission reduction mechanism,help the government to improve the current environmental regulation according to the behavior of enterprises,and encourage and guide high-carbon emission enterprises to achieve energy saving,carbon reduction,and pollution reduction synergy.On the other hand,it helps enterprises entering the carbon market to identify the interaction mechanism between carbon emission trading mechanism and enterprise financial performance,so as to help enterprises realize the importance of complying with environmental regulations and actively formulate more active emission reduction plans.