Analysis On The Impact Of Stranded Fossil Energy Assets Risk On Investors’ Decision Making

Climate change and transition risk have become a major issue concerning the sustainable development of human society.In this context,stranded assets of fossil energy have increasingly become a critical factor effecting the development of corporate and the security and stability of financial markets.With the proposed "double carbon" target,China is committed to "carbon peak" by 2030,then achieves "carbon neutral" by2060,which is both an opportunity and a challenge for the transformation of energy-intensive industries and carbon-intensive enterprises.With the frequent occurrence of extreme climate disasters and the continuous development of market players’ understanding of climate change,stranded asset risk may bring more short-and medium-term impacts than previously expected.Due to the important position of fossil energy in industrial production and economic development,once large-scale asset stranding occurs,it will affect many stakeholders such as energy-intensive enterprises in upstream and downstream industries,financial markets,government institutions and the public.Market investor expectation,financial institution support and government policy intervention all play an important role in the spread of stranded risk of traditional fossil energy assets.Therefore,investor risk decision-making and enterprise climate risk management will be crucial in preventing and defusing financial market risks and even systemic risks caused by stranded fossil energy assets.Compared with the macro analysis of stranded asset risk,the existing research on the application of micro models,especially the analysis of corporate climate risk governance level and investor decision-making level,is less.Compared with the more mature corporate social responsibility and carbon information disclosure in developed countries,Chinese enterprises’ climate risk related information disclosure is relatively lacking,and the data and experience provided are limited.Therefore,the current domestic research on the stranding of fossil energy assets is mainly qualitative analysis,but few quantitative studies.Based on the typical facts of climate transition risk diffusion,this thesis studies how the transition risk affects investors’ decision-making through the data of Chinese A-share high-carbon listed companies from 1998 to 2021,which is mainly divided into three parts.(1)By integrating the influences of government environmental policy,environmental technological innovation and social environmental norms,the stranded risk of fossil energy assets of enterprises is measured,and the evolution and fluctuation characteristics of stranded risk of fossil energy assets of Chinese enterprises are analyzed.The analysis results show that: In the past two decades,the stranded risk of Chinese enterprises’ fossil energy assets has shown a trend of oscillating rise,and increased significantly after the "double carbon" target.(2)Combined with efficient market theory and asset pricing theory,this thesis tests whether Chinese investors integrate the stranded risk of fossil energy assets and seek risk premium,and tests how investors with heterogeneous beliefs allocate fossil energy-related assets based on behavioral finance theories.The empirical results show that the stranded risk of fossil energy assets of Chinese enterprises will be transmitted through the asset market and affect investors’ asset allocation and risk decisions,but investors with heterogeneous beliefs have different decisions.(3)In order to analyze the mechanism of stranding risk’s influence on investors’ decision making,this thesis establishes a four-dimensional information analysis framework of "Industry-Policy-Business-Technology" based on signal transmission theory and investors’ limited attention theory,and tests how different corporate characteristics and climate management strategies affect the decision making of investors with heterogeneous beliefs.The mechanism test shows that the industry,the green finance development level,the green technology innovation level and the business transformation of the fossil energy enterprise will have different degrees of moderating effect on the risk decision of heterogeneous belief investors.Among them,favorable green finance policies and effective climate management signals of enterprises can restrain the asset-stripping behavior of investors to a certain extent,and solve the further spread of stranded risk.In view of this,this thesis puts forward the following suggestions:(1)Government and market level: First,it is necessary to improve the disclosure system and disclosure supervision mechanism of corporate climate risk information,establish the verification standards and index system of corporate climate risk suitable for China’s national conditions,and enhance the confidence of market investors.Secondly,a scientific corporate climate governance rating system should be established to provide an important basis for financial market investors to evaluate corporate transformation risks and transformation practices,and finally form a scientific and efficient climate risk pricing system.In addition,the government and financial institutions should expand financing channels for enterprises,promote green finance innovation and market regulation,and guide the market to actively participate in green investment.(2)For enterprises: Firstly,stress tests should be strengthened on fossil energy-related stock assets,backward and high-carbon assets of enterprises should be phased out in an orderly manner,and other corporate,financial or systemic risks derived from stranded fossil energy assets should be prevented.Secondly,enterprises should prioritize low-carbon asset investment in advance to avoid locking in their own high-carbon path and grasp the best period of cost reduction and efficiency increase.Finally,to actively evaluate the stranding risk of new technology iteration,it is necessary to scientifically evaluate the R&D cycle,iteration speed and market entry time of new technology and new products through multi-level investment methods such as pilot and pilot trials,so as to prevent the potential impairment risk and R&D input stranding of rapid technology iteration.