Uncertain climate policy and enterprise productivity: evidence from China

The frequent fluctuations in climate policy uncertainty can potentially affect corporate productivity. Using panel data from Chinese A-share listed companies between 2008 and 2023, this study examines the impact of climate policy uncertainty on corporate productivity and its underlying mechanisms. We find that climate policy uncertainty significantly reduces corporate productivity, manifesting as increased capital misallocation, further undermining overall production efficiency. Further analysis indicates that the influence of the climate policy uncertainty (CPU) on capital misallocation gradually weakens as the distance between firms and provincial capital cities increases. Moreover, the adverse effect of CPU on corporate production efficiency is more pronounced among manufacturing firms, firms with lower financing constraints, and larger enterprises. These results highlight the crucial role of a stable policy environment in facilitating optimal resource allocation and promoting economic efficiency. The findings provide robust theoretical foundations and empirical evidence to inform policy formulation and corporate strategic decision-making in related fields.