# Climate policy uncertainty and firm-level total factor productivity: Evidence from China

“Climate policy uncertainty and firm-level total factor productivity: Evidence from China” (2022), by Xiaohang Ren et al. Economics research paper. Original abstract below, unchanged. No free PDF was found.

- Authors: Xiaohang Ren, Xiao Zhang, Cheng Yan, Giray Gözgör
- Published: July 27, 2022
- Field: Economics
- DOI: https://doi.org/10.1016/j.eneco.2022.106209
- Source: https://doi.org/10.1016/j.eneco.2022.106209

## Abstract

Using 2605 Chinese A-share listed companies in the mining, manufacturing, and energy production and supply sectors from 2009 to 2020, we examine the relationship between climate policy uncertainty (CPU) and firm-level total factor productivity (TFP). The main findings are as follows: First, CPU significantly reduces firm-level TFP, with a greater impact on low-productivity firms than on high-productivity firms; second, the negative effect of CPU on firm-level TFP is most pronounced for non-state-owned, labor-intensive, and capital-intensive companies; third, CPU hinders research and development investment and reduces the amount of free cash flow. These results indicate that CPU exerts negative impacts on firm-level TFP mainly via its effects on the capital status of the companies. Our findings remain valid after a series of robustness tests and controlling for endogeneity. The government should introduce forward-looking climate policies to reduce the negative impact of policy uncertainty.

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