Carbon Emissions Trading and Firms’ Environmental Performance: Evidence from China’s Pilot Carbon Markets

DOI

10.2991/978-94-6239-825-2_44How to use a DOI?

Keywords

Carbon emissions trading; Firm’s environmental performance; Green innovation; Staggered DID; Executive characteristics

Abstract

China operates the world’s largest carbon emissions trading scheme (ETS), while whether this market-based tool improves firms’ environmental performance needs more focuses. We use the staggered difference-in-differences design on 50,776 firm-year observations of A-share listed firms from 2008 to 2024. We find that ETS coverage raises firms’ environmental performance scores by 0.536 points, a rising equal to roughly one quarter of the sample mean. The result is robust to PSM-DID matching, placebo testing with 500 random assignments, lagged outcomes, an alternative performance measure, and panel Tobit estimation. The mechanism analysis shows that green technology innovation transmits the effect, and its substantive component, green invention patents, contributes substantially more than its strategic component, green utility models. We further find that executive compensation positively moderates the policy effect, whereas female executive representation moderates it negatively. This effect is more concentrated in high-regulation regions, large firms, and financially constrained firms. Carbon emissions trading scheme thus appears to work through genuine technology change, with benefits that hinge on regulatory complementarity, firm capability, and internal governance.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Peiyao Li
AU  - Tiansen Liu
PY  - 2026
DA  - 2026/11/10
TI  - Carbon Emissions Trading and Firms’ Environmental Performance: Evidence from China’s Pilot Carbon Markets
BT  - Proceedings of the 2026 5th International Conference on Public Service, Economic Management and Sustainable Development (PESD 2026)
PB  - Atlantis Press
SP  - 452
EP  - 460
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-825-2_44
DO  - 10.2991/978-94-6239-825-2_44
ID  - Li2026
ER  -