Energy transition and corporate geographic expansion

Accelerating the energy transition is pivotal to achieving sustainable economic development, yet localized environmental policies can profoundly reshape the spatial allocation of corporate capital. The impact of place-based energy transition policies on firms' cross-regional investment remains largely unexplored. Existing studies primarily examine the environmental and economic consequences of such policies, while paying limited attention to their influence on firms' geographic expansion strategies. Using a sample of Chinese A-share listed firms from 2006 to 2022, we examine whether and how the New Energy Demonstration City (NEDC) pilot policy affects corporate cross-regional investment (CORI). We find that the NEDC policy significantly increases firms' CORI, indicating that firms located in pilot cities expand more actively beyond their home provinces. This finding is consistent with the resource-based view. We further find that this effect is stronger for non-state-owned firms, non-heavy-polluting firms, and firms audited by the Big Four, and remains robust to a series of robustness and endogeneity tests. Mechanism analyses show that the NEDC policy promotes CORI by reducing information asymmetry and lowering corporate risk-taking. These findings suggest that place-based energy transition policies reshape firms’ geographic allocation of resources and provide new evidence on how policy-induced environmental change affects corporate investment decisions.