The impact of carbon policy on corporate risk-taking with a double/debiased machine learning based difference-in-differences approach

Abstract

This study adopts the more cutting-edge DMLDID (double/debiased machine learning based difference-in-differences) approach to demonstrate the impact of carbon policy on corporate risk-taking, and the strong conclusion suggests that carbon policy significantly reduces corporate risk-taking. The further analysis concludes that carbon policy negatively impacts corporate risk-taking by reducing investor attention and raising financing constraints. Also carbon policy significantly reduces the risk-taking of SOEs and heavy polluters. This study has been shown to have great significance for firms to resist external policy risks, mitigate internal business risks, develop emission reduction strategies, and achieve sustainable corporate development.