Blessing or Curse : Low-Carbon Policy and Corporate Growth

Using China's Low-carbon city (LCC) pilot in 2017 as a quasi-natural experiment, we identify the causal effect of low-carbon policy on corporate growth. In the short term, we find that polluted firms in LCC experience a 6% decline in corporate industry-adjusted sales growth after 2017. Our results further reveal that the impact of LCC on corporate growth is more attenuated for firms with well-established governance regimes, widespread analyst coverage, intense competition pressure, and valid capability of financing. Additionally, our main finding disappears using a non-polluted subsample, suggesting that only polluted firms in LCC suffer from short-term operating distress