The Impact of Carbon Emissions Trading on the Profitability and Debt Burden of Listed Companies
Round 1
Reviewer 1 Report
The article poses a topical issue of analyzing and modeling the impact of Carbon Emissions Trading on the profitability and Debt Burden of Listed Companies.
The paper analyzes panel data using the methods of propensity score matching and the difference in differences.
The article is written in a competent scientific language. A thorough analysis of the literature on the subject was carried out.
However, there are a number of remarks:
1. The phrase "the existing impact of carbon emissions trading on companies is generally studied from the perspective of firm value, while research on the impact of carbon emissions trading on the profitability and debt burden of listed companies in China remains insufficient" , lines 184-186, requires deeper justification or references
2. Authors propose solutions, lines 466-474. However, it is doubtful that this can be done for companies of all industries, fields and sizes. This thesis requires more detailed study.
3. It is desirable to describe in more detail the proposed approach to data collection and processing - how the problem with missing data was solved, how the panels were formed, whether normalization was used, etc.
4. The list of references needs to be supplemented with new publications in the field, newer than 2019
Author Response
Thank you very much for your helpful comments on our paper. Corresponding to your suggestions, in the revision we have responded as follows:
GC1: The phrase "the existing impact of carbon emissions trading on companies is generally studied from the perspective of firm value, while research on the impact of carbon emissions trading on the profitability and debt burden of listed companies in China remains insufficient", lines 184-186, requires deeper justification or references.
Response: According to the suggestions, we added relevant references in Chapter 2 Literature review and again summarized the relevant discussion. Please see page3-4 for details.
GC2: Authors propose solutions, lines 466-474. However, it is doubtful that this can be done for companies of all industries, fields and sizes. This thesis requires more detailed study.
Response: According to the suggestions, considering the small number of listed companies that continue to participate in carbon trading policies, it may not be possible to obtain the correct results if we continue to analyze the heterogeneity based on the company's all industries fields and sizes. Therefore, this section is mainly a policy suggestion from the macro level. Further research can be carried out with the full opening of the policy. Please see section 5 for details.
GC3: It is desirable to describe in more detail the proposed approach to data collection and processing - how the problem with missing data was solved, how the panels were formed, whether normalization was used, etc.
Response: According to the suggestions, the data of listed companies participating in carbon trading policies in this paper were collected manually from the list of companies participating in carbon trading policies published on the website of Development and Reform Commission of seven pilot carbon trading pilot provinces and cities. The listed companies that continued to participate in the carbon trading policies from 2013 to 2019 were selected as the treatment group, and the remaining listed companies in the seven carbon trading pilots were used as the control group, excluding the companies listed after December 31, 2010, real estate, financial, partially missing data, ST, ST* and delisted companies. Finally, the data of 56 listed companies in the treatment group and 556 listed companies in the control group were obtained, a total of 612 listed companies from 2010-2019. Please see page 6 for details.
GC4:The list of references needs to be supplemented with new publications in the field, newer than 2019
Response: According to the suggestions, we updated the references in literature review section, supplemented the relevant literature after 2019 and marked them in the contents. Please see page 21-22 for details.
Author Response File: 
Author Response.docx
Reviewer 2 Report
This manuscript analyzes the impact of carbon emissions trading on the profitability and debt burden of listed companies. the topic selection has theoretical significance and practical value, but there are the following problems that need to be improved:
1. The Introduction introduces the carbon trading market in a large length, but does not highlight the importance and necessity of this research, lack of focus. It is suggested to modify the Introduction.
2. In the part of Literature review, the 2.1. Pilot market for carbon emissions trading only focuses on "carbon trading market", and does not closely focus on the research topics "carbon trading market" and "profitability and debt burden of listed companies", so the selected literature is not representative.
3. The parallel trend test fails. After the implementation of carbon trading policy in 2014, there is no difference between the profitability and debt burden of the two groups of listed companies.
4. Please discuss your result more deeply. In the 4.3. Carbon emissions trading, firm profitability and debt burden, it is suggested that the sample regression results should be slightly explained to explain the reasons for this phenomenon. And, in the Heterogeneity test, authors should analyze the causes of heterogeneous results.
5. The paper also has a lot of errors in the details. For instance, in the line 342, Robustness test results are shown should in Table 5, not Table 6. And, in the line 358 should be “heterogeneity test”, not “discussion”.
6. The overall logic of the paper is not strong. There is no theoretical analysis of why the carbon trading market affects the profitability and debt burden of listed companies, and there is no mechanism test part to explore how the carbon trading market affects the profitability and debt burden of listed companies.
7. The paper is not rigorous enough. In the DID model, the authors should add city-level control variables or fix city effects. And the robustness test is too simple, and it is suggested to add other 3-4 robustness tests to increase the reliability of the article's conclusions. It is suggested to add an explanation of why the time interval from 2010 to 2013 was selected in the robustness test, and not still 2010 to 2019.
8. The variables "treated" and "t" were introduced into the benchmark regression of the article, but the heterogeneity in the following article was eliminated, which seemed that the article was not rigorous enough.
Author Response
Thank you very much for your helpful comments on our paper. Corresponding to your suggestions, in the revision we have responded as follows:
GC1: The Introduction introduces the carbon trading market in a large length, but does not highlight the importance and necessity of this research, lack of focus. It is suggested to modify the Introduction.
Response: According to the suggestions, we revised the introduction to highlight the importance and necessity of this study, focusing on the analysis of the mechanism of carbon trading market affecting the profitability and debt burden of companies.
GC2: In the part of Literature review, the 2.1. Pilot market for carbon emissions trading only focuses on "carbon trading market", and does not closely focus on the research topics "carbon trading market" and "profitability and debt burden of listed companies", so the selected literature is not representative.
Response: According to the suggestions, we revised the literature review. We mainly supplement the literature on the impact of carbon trading policies on companies, including company output levels, carbon emission reduction effects, environmental health effects, etc. Please see see page 2-4 for details.
GC3: The parallel trend test fails. After the implementation of carbon trading policy in 2014, there is no difference between the profitability and debt burden of the two groups of listed companies.
Response: According to the suggestions, we further conduct the parallel trend test. The results of all regressions before 2014 were not significant, indicating that there was no significant difference between the treatment group and the control group before the implementation of the carbon trading policy. In the year when the carbon trading policy was implemented, the treatment group increased significantly compared with the control group. Therefore, the sample passes the parallel trends test required for the DID model. Please see page 10-11 for details.
GC4: Please discuss your result more deeply. In the 4.3. Carbon emissions trading, firm profitability and debt burden, it is suggested that the sample regression results should be slightly explained to explain the reasons for this phenomenon. And, in the Heterogeneity test, authors should analyze the causes of heterogeneous results.
Response: According to the suggestions, we further explain the reasons for the regression phenomenon in Section 4.3 and the heterogeneity part. First, in terms of enterprise profitability, under the guidance of the carbon trading market, the companies can improve the performance by increasing investment in low-carbon production technology; Secondly, for the corporate debt burdens, the companies with advanced production technology can often complete the emission reduction task within the specified time, and there will be excess carbon emission quotas; Finally, as for the heterogeneity test,compared with non-state-owned companies, state-owned companies are better in the implementation of carbon trading policies, so the effect is more obvious. Please see page 13,17,18,20 for details.
GC5: The paper also has a lot of errors in the details. For instance, in the line 342, Robustness test results are shown should in Table 5, not Table 6. And, in the line 358 should be “heterogeneity test”, not “discussion”.
Response: According to the suggestions, we modified the mentioned content and further examined the full text. The details have been marked in the paper.
GC6: The overall logic of the paper is not strong. There is no theoretical analysis of why the carbon trading market affects the profitability and debt burden of listed companies, and there is no mechanism test part to explore how the carbon trading market affects the profitability and debt burden of listed companies.
Response: According to the suggestions, we revised part of the structure and added theoretical analysis to further explain that the carbon trading market would affect the profitability and debt burden of listed companies. In the empirical analysis, we use the ratio of R&D investment to operating income as the company's innovation investment to test the mechanism of action. The results of the mechanism test show that the carbon trading policy will significantly increase the company's innovation investment, thereby increasing the company's profitability and reducing the company's debt burden.
GC7: The paper is not rigorous enough. In the DID model, the authors should add city-level control variables or fix city effects. And the robustness test is too simple, and it is suggested to add other 3-4 robustness tests to increase the reliability of the article's conclusions. It is suggested to add an explanation of why the time interval from 2010 to 2013 was selected in the robustness test, and not still 2010 to 2019.
Response: According to the suggestions, we add city-level control variables in Section 4.4 to further test the DID model; Referring to Li and Zhu (2021), the robustness tests is carried out by changing time. Two parts of time before and after the occurrence time are selected as the robustness test time interval, and three robustness tests in Section 4.5 are added. Companies within the range of 2014-2019 are selected as the research samples, and 2015, 2016 and 2017 are taken as the time points. If the results is not significant, then the above results are valid. All prove that the original results are valid.
GC8: The variables "treated" and "t" were introduced into the benchmark regression of the article, but the heterogeneity in the following article was eliminated, which seemed that the article was not rigorous enough.
Response: According to the suggestions, many scholars removed these two variables in the empirical process (Zhang and Wang, 2021; Qi et al, 2021; Li and Zhu,2021) , so we also try to remove them in the heterogeneity analysis, and the empirical results do not change. When we save these two variables, the regression results are: (1) the policy has significantly reduced the debt burden of state-owned and non-state-owned listed companies, and the impact on the debt burden of state-owned enterprises is greater and more significant; (2) the policy has a more obvious reduction effect on the debt burden of competitive listed companies than monopolistic listed companies; (3) the policy has a more obvious reduction effect on the debt burden of listed companies in high-carbon emission industries than the others. Please see page 21-22 for details.
Author Response File: Author Response.docx
Reviewer 3 Report
Dear Authors,
I am sending my comments to the article "The Impact of Carbon Trading on the Profitability and Debt of Listed Companies".
1.
Variable – cost- Debt capital Total debt capital
In my opinion, it is very misleading to use the abbreviation as Cost. Please change it2.
Please provide information on why the authors chose the ROA indicator for the analysis.Why they didnt use the more important ROE and ROS indicators ?
3.
Please expand the literature for the years 2020-2022.4.
size - Company Size Natural logarithm of total assets
Please explain how the companies are divided according to size.Whether SMEs were used for the research. ? Please more on this.
5.
Chapter 5 - discussion. There is only one source on which the discussion is based - Dai et al. (2018). Please base the research conducted to a greater extent on the discussion,on the comparison of the results with the research of other authors. Sincerely
Author Response
Thank you very much for your helpful comments on our paper. Corresponding to your suggestions, in the revision we have responded as follows:
GC1: Variable – cost- Debt capital Total debt capital. In my opinion, it is very misleading to use the abbreviation as Cost. Please change it
Response: According to the suggestions, we replaced cost (Debt capital Total debt capital) with deca and modified it in the context.
GC2: Please provide information on why the authors chose the ROA indicator for the analysis.Why they didnt use the more important ROE and ROS indicators ?
Response: In the process of searching for data, it was found that the ROE and ROS indicators data was missing a lot, so we referred to (Oestreich, 2015) and adopted the ROA indicator to measure the company's profitability. Please see page 21-22 for details.
GC3: Please expand the literature for the years 2020-2022.
Response: According to the suggestions, we updated the references in literature review section, supplemented the relevant literature after 2020 and marked them in the contents. Please see page 21-22 for details.
GC4: size - Company Size Natural logarithm of total assets. Please explain how the companies are divided according to size. Whether SMEs were used for the research.? Please more on this.
Response: The size variable measures the size of the company, which is equal to natural logarithm of total assets, and we use the company size as the control variable. The data of listed companies participating in carbon trading policies in this paper were collected manually from the list of companies participating in carbon trading policies published on the website of Development and Reform Commission of seven pilot carbon trading pilot provinces and cities. Therefore, SMEs has been included in the published list of companies participating in carbon emissions trading. Please see page 6 for details.
GC5: Chapter 5 - discussion. There is only one source on which the discussion is based - Dai et al. (2018). Please base the research conducted to a greater extent on the discussion, on the comparison of the results with the research of other authors. Sincerely.
Response: According to the suggestions, we added the literature conclusions of other scholars (Testa, 2011; Zhang and Wang, 2021; Qi et al , 2021), and compared the empirical results to reach the final result. Please see page 16-19 for details.
Author Response File: Author Response.docx
Round 2
Reviewer 1 Report
In accordance with the reviewer comments the authors made all the necessary corrections and additions.
The new article version is acceptable and recommended for publication in the journal.
Author Response
Thank you very much for your helpful comments on our paper.
Author Response File: Author Response.docx
Reviewer 2 Report
Thanks to the author for the careful revision. The quality of this version has been improved in comparison with the previous manuscript. However, I think the manuscript still has room for improvement in the following aspects.
Q1: The results of the mechanism analysis can be supplemented in the abstract section and conclusion section.
Q2: The introduction still does not provide sufficient justification for the importance and significance of the study. It is suggested to refer to high quality journals such as JEEM to improve the introduction. And, additional analysis of the mechanism of carbon trading market affecting the profitability and debt burden of companies should complement the literature reference sources.
Q3: In the part of literature review, it is recommended that the literature should be presented categorically, and the connection between the literature should be need to follow a sound logic, making it serialized and organized.
Q4: The mechanism analysis is not clear. It is recommended that the mechanism diagram be supplemented to clarify the pathways by which the carbon trading market affects the debt capacity and debt burden of listed companies. The methodology for mechanism testing should be supplemented in the methodology and data section.
Q5: It is suggested that each column in the table be briefly introduced in the empirical results section. For example, column (1) of Table 4-5 discusses the impact of carbon trading policies on corporate profitability. Based on this, column (2) adds PSM. In addition, it is necessary to consider whether the statement "model (1-1)" in line 373 is reasonable. It is suggested that column x, rather than model x, be used for the analysis of the table in the regression results.
Q6: It is suggested that in the part of empirical results, the structural arrangement should be: first, the benchmark regression, and then the mechanism analysis.
Q7：In the benchmark regression, the regression results are not discussed deeply enough. In the heterogeneity analysis of state-owned and non-state-owned listed companies, there is no further reason analysis.
Author Response
Thank you very much for your helpful comments on our paper. Corresponding to your suggestions, in the revision we have responded as follows:
GC1: The results of the mechanism analysis can be supplemented in the abstract section and conclusion section.
Response: According to the suggestions, we added the results of the mechanism analysis to the abstract section and conclusion section. Please see line 18-19, 593-595 for details.
GC2: The introduction still does not provide sufficient justification for the importance and significance of the study. It is suggested to refer to high quality journals such as JEEM to improve the introduction. And, additional analysis of the mechanism of carbon trading market affecting the profitability and debt burden of companies should complement the literature reference sources.
Response: According to the suggestions, we improved the introduction by providing sufficient justification for the importance and significance of the study. And we complement the literature reference sources (Yang et al., 2016 ; Zhang and Wang, 202) to further analyze the mechanism of carbon trading market affecting corporate profitability and debt burden. Please see page 2 for details.
GC3: In the part of literature review, it is recommended that the literature should be presented categorically, and the connection between the literature should be need to follow a sound logic, making it serialized and organized.
Response: According to the suggestions, we rearranged the literature review section to categorize and summarize the literature. Please see page 3-5 for details.
GC4: The mechanism analysis is not clear. It is recommended that the mechanism diagram be supplemented to clarify the pathways by which the carbon trading market affects the debt capacity and debt burden of listed companies. The methodology for mechanism testing should be supplemented in the methodology and data section.
Response: According to the suggestions, we added the mechanism diagram (Figure 4 Influence mechanism diagram) to clarify the pathways by which the carbon trading market affects the debt capacity and debt burden of listed companies in section 4.3. And we added the methodology for mechanism testing in section 3.1. Please see line 228-240, 434-435 for details.
GC5: It is suggested that each column in the table be briefly introduced in the empirical results section. For example, column (1) of Table 4-5 discusses the impact of carbon trading policies on corporate profitability. Based on this, column (2) adds PSM. In addition, it is necessary to consider whether the statement "model (1-1)" in line 373 is reasonable. It is suggested that column x, rather than model x, be used for the analysis of the table in the regression results.
Response: According to the suggestions, we introduced each column in the empirical results section, and changed model x with column x in each table. Please see section 4 and section 5 for details.
GC6: It is suggested that in the part of empirical results, the structural arrangement should be: first, the benchmark regression, and then the mechanism analysis.
Response: According to the suggestions, we swapped the original section 4.3 mechanism analysis and section 4.4 benchmark regression. Please see page 12-15 for details.
GC7: In the benchmark regression, the regression results are not discussed deeply enough. In the heterogeneity analysis of state-owned and non-state-owned listed companies, there is no further reason analysis.
Response: According to the suggestions, we continued to discuss the regression results in the benchmark regression by combining the results before and after adding the city control variable. And the reason for the increase in the heterogeneity of state-owned and non-state-owned listed companies are further analyzed. Please see line 408-414,517-522 for details.
Author Response File: Author Response.docx
Reviewer 3 Report
Dear Authors, I have no comments on the article. CongratulationsSincerely
Author Response
Thank you very much for your helpful comments on our paper.
