How low-carbon transition enables corporate sustainability: A corporate risk-taking perspective

Abstract

Embracing low-carbon transition (LCT) is crucial for achieving sustainable development goals. This study theoretically analyzes the impact of LCT on corporate sustainability from a risk-taking perspective. By constructing a multi-period difference-in-differences (DID) model of low-carbon city pilot policy (LCCP). We find that LCT promotes corporate risk-taking (CRT). Heterogeneity analysis shows that LCT significantly improves CRT in state-owned enterprises (SOEs), high-risk-taking enterprises (HRTs), and central and western China. Mechanism analysis shows that LCT will motivate enterprises to improve technological innovation and increase CRT through the innovation compensation effect, however, it will increase the financing constraints (SA) of enterprises and reduce CRT through the cost-push effect. Further analysis reveals that equity equalization (Bala) amplify the positive impact of LCT on CRT. In contrast, the shareholding of institutional investors (Inst) and corporate competitive culture(Cult) will weaken this positive effect. This paper provides the theoretical basis and practical reference for the research on pilot policies and CRT.