The low carbon transformation of cities and corporate investment efficiency: Evidence from a quasi-natural experiment

This paper studies the impact of low-carbon city pilot (LCCP) policy on corporate investment efficiency based on data from Chinese A-share companies from 2007 to 2019. Our results indicate that LCCP policy significantly reduces corporate investment efficiency by increasing the environmental uncertainty faced by corporations, our fundamental conclusion remains robust after a series of robustness tests. Through heterogeneous analysis, we find that LCCP policy has a more obvious negative impact on corporations with lower diversification levels, non-state-owned corporations within high-carbon emitting industries and those located in high-carbon emitting cities. Further analysis suggests that local governments can alleviate the policy's negative impact on local corporations by increasing their response to the LCCP policy. Overall, this study provides theoretical evidence for a comprehensive examination of the LCCP policy, contributing to China's early achievement of carbon peaking and carbon neutrality as well as providing theoretical guidance for other countries.