Climate policy uncertainty associated with more green M&A among Chinese listed firms

A study of Chinese listed firms from 2000 to 2023 found a positive association between climate policy uncertainty and firms’ green mergers and acquisitions. Based on the study abstract, a one-standard-deviation increase in climate policy uncertainty was associated with an approximately 1.2 percentage point higher probability of undertaking a green M&A and 0.078 additional green M&As.

The research used Real Options Theory and Growth Options Theory to frame how firms may respond to uncertainty. These theories offer contrasting interpretations: Real Options Theory treats uncertainty primarily as a challenge, whereas Growth Options Theory treats it as an opportunity. The authors concluded that the reported results were more consistent with the latter perspective in the context of green M&A.

The study’s mechanism analysis identified two associations that could help explain the findings. Higher climate policy uncertainty was associated with heightened environmental regulatory intensity and enhanced internal green governance. The abstract reports these as evidence consistent with the proposed channels, rather than establishing that the mechanisms caused the increase in green acquisitions.

Green M&A undertaken under higher climate policy uncertainty was also associated with stronger subsequent green innovation outcomes. However, the researchers did not find corresponding evidence for financial performance. The available evidence is an abstract of an empirical study focused on Chinese listed firms over the stated period; it does not provide enough methodological or robustness detail to assess how broadly the results may apply. The article was published as an accepted version subject to further edits.

Subject of Research: Associations between climate policy uncertainty and green mergers and acquisitions among Chinese listed firms

Article Title: Challenge or opportunity: climate policy uncertainty and green merger and acquisition

Article References: Cao, Z., & Lin, M. (2026). Challenge or opportunity: climate policy uncertainty and green merger and acquisition. Humanities and Social Sciences Communications. https://doi.org/10.1057/s41599-026-09432-w

Image Credits: AI Generated

DOI: 10.1057/s41599-026-09432-w

Keywords: climate policy uncertainty, green mergers and acquisitions, Chinese listed firms, green innovation, environmental regulation, corporate governance, growth options theory, real options theory, Challenge, opportunity, climate, policy