Study On China’s Market Reaction To The Copenhagen Carbon Policies

Global warming has become the world’s hot topic of common concern.The sharp increase in greenhouse gas emissions is the main cause of global warming.Carbon dioxide is the most important component of greenhouse gases.Nowadays,China has become the world’s largest carbon emitter.In a series of climate summit,developed countries strongly urged developing countries to bear the task of reducing carbon emission.During the Copenhagen climate summit,Chinese government has implemented many carbon reduction policies and adopted measures to reduce carbon emission.Our study focuses on China’s market reaction to these policies and measures.This paper mainly collected carbon emission policies that Chinese government has implemented and attitudes towards climate change from 2009 to 2011 as sample events. We select several representative market price index to measure different countries’market yields.Then we use event study and calculate cumulative abnormal returns to analyze China’s market responses to carbon related policies.Finally,we find that there is a significant positive market reaction to carbon policies by using t test.Further,we classify HS300 index sample shares into two types:heavy polluting industries and non-heavy polluting industries.We use two-sample t test with unequal variances to demonstrate that heavy polluting industries have stronger positive reaction than non-heavy polluting industries.In order to make more convincing conclusions,we extend event window of significant events,then use event study again to prove that Chinese capital market has a significant positive reaction to these carbon related policies.Further, we select 222 sample firms from HS300 index.By using multiple regression analysis,we once again prove that heavy polluting industries have stronger positive reaction to carbon policies than non-heavy polluting industries.Finally,our empirical results show that China’s carbon-related policies are in line with the interests of Chinese enterprises and social development requirements.These policies have also achieved affirmation and support from Chinese investors.On the basis of existing research of relationship between carbon disclosure and carbon performances,we first explore China’s market reaction to carbon-related policies. On the one hand,our paper enriches the study of market reaction by using event study and provides theoretical basis and empirical evidence for our countries’adoption of carbon reduction policies.On the other hand,our study is beneficial for enterprises to discover carbon reduction opportunities by standardizing carbon disclosure.At the same time,our study encourages enterprises to develop new energies,takes the initiative to assume environmental protection responsibilities and promotes their own sustainable development.In addition to this,our paper is also beneficial for our government to formulate more scientific carbon reduction standards and strengthen cooperation with developed countries.Finally,it will enhance China’s position in international climate negotiations and safeguard the interests of developing countries.