Does carbon emission trading scheme improve corporate green mergers and acquisitions? Evidence from Chinese industrial enterprises

Abstract

Utilizing the implementation of the Carbon Emission Trading Scheme (CETS) as an external change, we employ a difference-in-difference model to examine its impact and mechanisms on corporate green mergers and acquisitions (M&A). Our study uses a sample of A-share listed companies in the industrial sector from 2007 to 2020. Empirical findings indicate that the CETS significantly promotes corporate green M&A. Further analysis suggests that the CETS promotes corporate green M&A by alleviating financing constraints and increasing media attention. This effect is particularly pronounced in regions with lower marketization degrees, within manufacturing industries, and among non-state-owned enterprises (non-SOEs). Additionally, the CETS primarily promotes corporate mixed green M&As. Notably, the green M&A supported by CETS is larger in scale and leads to improvements in both green innovation performance and overall financial performance post-implementation. This evidence underscores the dual benefits of CETS-induced green M&A, providing both environmental and economic advantages.