Management Practices and Climate Policy in China

50 Pages Posted: 4 Mar 2021 Last revised: 22 Jun 2022

See all articles by Soo Keong Yong

Soo Keong Yong

University of Waikato - Waikato Management School

Ulrich J. Wagner

University of Mannheim - Department of Economics

Peiyao Shen

ShanghaiTech University - School of Entrepreneurship and Management

Laure de Preux

Imperial College Business School

Mirabelle Muûls

Imperial College Business School and Grantham Institute - Climate Change and the environment; London School of Economics - Centre for Economic Performance

Ralf Martin

Imperial College London

Jing Cao

Tsinghua University

Date Written: June 10, 2022

Abstract

We investigate how management quality moderates the impact of carbon pricing on Chinese firms. Based on interviews with managers and lead engineers at manufacturing firms in Hubei and Beijing, we construct a novel index on climate-change related management practices and link it to firm data from various sources. We document that well-managed firms are on average more productive and engage more in green innovation than the rest. We conduct an event study of the introduction of a regional cap-and-trade scheme for CO2 in Beijing and find that treated firms reduced coal consumption more than control firms, but this effect is statistically significant only for well-managed firms. In the absence of such firms, our empirical estimates imply that aggregate coal use would have increased rather than decreased following the introduction of carbon pricing. This highlights the importance of good management practices for market-based climate policies to be effective.

Keywords: climate policy; firm behavior; management practices; emissions trading scheme; policy evaluation

JEL Classification: D22, O31, Q48, Q54

Suggested Citation

Yong, Soo Keong and Wagner, Ulrich J. and Shen, Peiyao and de Preux, Laure and Muûls, Mirabelle and Martin, Ralf and Cao, Jing, Management Practices and Climate Policy in China (June 10, 2022). Available at SSRN: https://ssrn.com/abstract=3797466 or http://dx.doi.org/10.2139/ssrn.3797466

Soo Keong Yong (Contact Author)

University of Waikato - Waikato Management School ( email )

Te Raupapa
Private Bag 3105
Hamilton, 3240
New Zealand

HOME PAGE: http://https://www.management.ac.nz/about/contact-info/our-people/syong

Ulrich J. Wagner

University of Mannheim - Department of Economics ( email )

D-68131 Mannheim
Germany

Peiyao Shen

ShanghaiTech University - School of Entrepreneurship and Management ( email )

100 Haike Rd
Pudong Xinqu, Shanghai
China

Laure De Preux

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

Mirabelle Muûls

Imperial College Business School and Grantham Institute - Climate Change and the environment ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

London School of Economics - Centre for Economic Performance ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Ralf Martin

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Jing Cao

Tsinghua University ( email )

Beijing, 100084
China

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