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A Study on the Impact of Carbon Emission Policy on Profitability of Listed Companies in China

  • Journal of Asia-Pacific Studies
  • Abbr : JAPS
  • 2023, 30(4), pp.5-34
  • DOI : 10.18107/japs.2023.30.4.001
  • Publisher : Institute of Global Affairs
  • Research Area : Social Science > Social Science in general
  • Received : November 9, 2023
  • Accepted : December 12, 2023
  • Published : December 30, 2023

JIN XU 1,  Sun Huaping 2,  Lyu XiaoPeng 1

1건국대학교
2北京科技大学

Accredited

ABSTRACT

Carbon dioxide, one of the emissions generated and emitted during industrial processes, contributes to global warming and environmental pollution. To reduce carbon emissions, China has implemented a carbon emission policy, the carbon emission trading system. In this paper, we will focus on the effectiveness that the carbon emission policy has, on the profits of listed companies. The implementation of carbon emissions trading policy has the most intuitive impact on listed companies, so this thesis investigates the effectiveness of carbon emissions trading policy on the earnings of listed companies in China. This paper uses Difference-in-Difference model about three indicators, ROA, ROE, and Tobin Q, to conduct an empirical analysis of Chinese A-share listed companies within the scope of the pilot cities that implements the carbon emission trading system. To reflect the reality, we first removed some samples that are unsuitable for participating the modeling. Then we set listed companies that participated in emission trading in 2013 as experimental groups, and that did not as control groups. Finally, we conducted DID empirical analysis of 1440 panel sample data from 2008 to 2019. An empirical analysis was conducted to determine whether the implementation of carbon emissions trading policy affects the earnings and market value of enterprises. The results show that the implementation of carbon emission trading policy has a positive effect on ROA, ROE, and Tobin Q of Chinese A-share listed enterprises, i.e., the implementation of carbon emission trading policy can effectively improve the earnings and market value of enterprises and has a positive impact on the development of listed enterprises. Based on the findings of this study, several suggestions are proposed to promote the carbon emission trading policy at the national level: 1. It is essential to strengthen the implementation of national-level carbon emission policies to ensure effective execution. 2. Establish a complete legal system for carbon emissions trading market to provide fundamental pillars for carbon emissions trading. 3. Set goals for international cooperation in carbon emissions trading market.

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