Management Practices and Climate Policy in China

70 Pages Posted: 4 Mar 2021 Last revised: 16 Aug 2023

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

University of Queensland - School of Economics

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: July 24, 2023

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 of climate-change related management practices and link it to firm data from various sources. We document higher average productivity and more green innovation among firms that are well managed according to the index. In an event study of the introduction of regional cap-and-trade schemes for CO2, we analyze how management quality interacta with treatment. While treated firms reduced coal consumption more than control firms, this effect is statistically significant only for well-managed firms. The reduction could have been 25% greater if badly managed firms had been well managed. Our study highlights that good management practices, in particular energy monitoring, enhance the effectiveness of market-based climate policies by enabling firms to rationally comply with those policies.

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 (July 24, 2023). 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, Waikato 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

University of Queensland - School of Economics ( email )

Brisbane, QLD 4072
Australia

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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