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Does carbon price uncertainty affect stock price crash risk? Evidence from China
Ren, X. Zhong, Y. Cheng, X. Yan, C. Gozgor, Giray
Ren, X.
Zhong, Y.
Cheng, X.
Yan, C.
Gozgor, Giray
Publication Date
2023-06
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© 2023 Elsevier. Reproduced in accordance with the publisher's self-archiving policy. This manuscript version is made available under the CC-BY-NC-ND 4.0 license.
Peer-Reviewed
Yes
Open Access status
openAccess
Accepted for publication
2023-04-14
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Abstract
This study examines the effect of carbon price uncertainty on stock price crash risk. Utilizing the dynamic panel model on the data of Chinese listed firms from 2011 to 2018, we find that high carbon price uncertainty increases stock price crash risk. The impact of carbon price uncertainty is more prominent in the heavily polluting industries and during the post-period of the Paris agreement. The two underlying channels through which carbon price uncertainty induces stock price crashes are managers' hoarding of bad news and investors' heterogeneity. Furthermore, reducing information asymmetry inside and outside the firms can mitigate the influence of carbon price uncertainty on stock price crash risk. Our findings demonstrate that carbon price uncertainty as a newly underexplored factor induced by the prevailing curb of catastrophe risks has unintended but important implications on stock prices.
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Accepted manuscript
Citation
Ren X, Zhong Y, Cheng X et al (2023) Does carbon price uncertainty affect stock price crash risk? Evidence from China. Energy Economics. 122:106689.
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Article