Earnings pressure and corporate carbon emissions: Empirical evidence from listed firms in China

Based on the perspective of externality theory, this paper takes Chinese listed firms from 2006 to 2020 as the research object, and empirically investigates the impact of earnings pressure on corporate carbon emissions and its intrinsic mechanism through ordinary least squares regression, and finds that: earnings pressure has a significant positive impact on corporate carbon emissions. Faced with earnings pressure, firms tend to prioritize short-term interests, which will lead to an increase in carbon emissions through the mechanism of reducing green innovation inputs and increasing the level of financing constraints. Additional analysis demonstrates that when the CEO of an enterprise has greater power and the firm is a local state-owned enterprise (SOE), earnings pressure has a significant boosting effect on carbon emissions; and when the firm refers to non-policy-focused industries and faces a lower litigation risk, the earnings pressure has a significant positive effect on carbon emissions as well.