Green Policies, Greener Wallets: How Cap‐and‐Trade Regulation Affects Cost of Capital
研究中国上市公司数据发现，总量控制与交易政策通过环境信息披露和流动比率机制，显著降低了企业的股权和债务成本，有助于缓解融资压力、促进绿色投资。
ABSTRACT As one of the most efficient regulations on climate abatement, the cap‐and‐trade mechanism has been broadly adopted to mitigate greenhouse gas emissions. Although there are common concerns about the nexus between environmental regulations and financial markets, this paper investigates how cap‐and‐trade policy affects companies' cost of equity (COE) and cost of debt (COD) and explores the underlying mechanisms. By merging nationwide data from China's listed companies and exploiting the staggered introduction of cap‐and‐trade pilots as a quasi‐natural experiment, we apply a propensity score matching and difference‐in‐differences framework. We find robust evidence that cap‐and‐trade policy significantly decreases companies' COE by 0.341% and COD by 0.492%, respectively. The reduction in capital costs makes cap‐and‐trade an attractive policy that can ease financing burdens, promote sustainable investment, and facilitate green transformation toward carbon neutrality. Mechanism analyses suggest that cap‐and‐trade regulation affects cost of capital through environmental information disclosure and current ratio. This study enriches the literature on comprehensive outcomes of cap‐and‐trade regulation in emerging economies and offers implications for regulators, managers, and stakeholders navigating the transition toward a net‐zero future.