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Climate policy uncertainty and firm-level total factor productivity: Evidence from China
Ren, X. Zhang, X. Yan, C. Gozgor, Giray
Ren, X.
Zhang, X.
Yan, C.
Gozgor, Giray
Publication Date
2022-09
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© 2022 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
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openAccess
Accepted for publication
24/07/2022
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Abstract
Using 2605 Chinese A-share listed companies in the mining, manufacturing, and energy production and supply sectors from 2009 to 2020, we examine the relationship between climate policy uncertainty (CPU) and firm-level total factor productivity (TFP). The main findings are as follows: First, CPU significantly reduces firm-level TFP, with a greater impact on low-productivity firms than on high-productivity firms; second, the negative effect of CPU on firm-level TFP is most pronounced for non-state-owned, labor-intensive, and capital-intensive companies; third, CPU hinders research and development investment and reduces the amount of free cash flow. These results indicate that CPU exerts negative impacts on firm-level TFP mainly via its effects on the capital status of the companies. Our findings remain valid after a series of robustness tests and controlling for endogeneity. The government should introduce forward-looking climate policies to reduce the negative impact of policy uncertainty.
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Citation
Ren X, Zhang X, Yan C et al (2022) Climate policy uncertainty and firm-level total factor productivity: Evidence from China. Energy Economics. 113: 106209.
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Article