*4.1. Benchmark Regression Results*

Table 4 shows the benchmark regression results of the effect of the pilot CET policy on companies' market value according to the empirical model shown in Equation (1). Column (1) shows the estimation results without controlling for any variable and by controlling for the fixed effects of the firm, while column (2) displays the outcomes without controlling for any variables, while the fixed effects of the firm and year are controlled. Column (3) presents the results with all control variables, and the fixed effects of firm and year are controlled. Column (4) outlines the results by controlling for the fixed effects of firm and industry. Column (5) displays the results by controlling for the fixed effects of the firm, year, and industry [14]. The coefficient of the core explanatory variable is significantly positive after adding control variables and fixing various effects, indicating that the result is relatively robust.

The benchmark regression results show that the market value of listed companies in the pilot regions is significantly higher than that of listed companies in the non-pilot regions. The market-oriented trading mechanism provides the price signals of carbon emissions permits to encourage companies to increase their investment in innovative activities and conform to the carbon emissions abatement requirements, thereby improving companies' market value. Additionally, the free allocation of carbon emissions permits could be accounted for by higher cash flows, which would also increase the market value of companies. These findings are in accordance with those of previous studies, such as those of Oberndorfer (2009), Veith et al. (2009), Oestreich and Tsiakas (2015), and Bui et al. (2019), who stated that the ETS scheme is positively related to companies' market value [1,2,5,6].


**Table 4.** The regression results of the effect of the pilot CET policy on companies' market value.

Note: Standard errors are in parentheses, and they are clustered at firm level. \*\* and \*\*\* indicate statistical significance at the 5% and 1% levels, respectively.
