This paper reconciles the debates on carbon return estimation by introducing the concept of equity duration. Our findings reveal that equity duration effectively captures the multifaceted effects of carbon transition risks. Regardless of whether carbon transition risks are measured by emission level or emission intensity, brown firms earn lower returns than green firms when the equity duration is long due to discount rate channel. This relationship reverses for short-duration firms conditional on the near-term cash flow. Our analysis underscores the pivotal role of carbon transitions' multifaceted effects on cash flow structures in understanding the pricing of carbon emissions.

Using a unique dataset from China spanning 2005 to 2023, we investigate how superstitious beliefs influence mutual fund managers’ risk-taking behavior and how this influence evolves over their careers. We find a significant 6.82% reduction in risk-taking during managers’ zodiac years, traditionally considered unlucky in Chinese culture. This effect is particularly pronounced among less experienced managers, those without financial education backgrounds, and those with lower management skills. The impact also intensifies during periods of high market volatility. Our findings challenge the traditional dichotomy between retail and professional investors, showing that even professional fund managers can be influenced by irrational beliefs early in their careers. However, the diminishing effect of superstition with experience and expertise suggests a gradual transition towards more rational decision-making. Our results provide insights into the process by which financial professionals evolve from exhibiting behavior akin to retail investors to becoming the rational actors often assumed in financial theory.

Our investigation reveals that the top 10 shareholders are the only credible contenders for dominant control rights in China's listed corporations. To measure the ultimate control of these entities, we adopt the Shapley-Shubik power index and calculate the principal shareholder's control at the top of the control pyramid. Our results demonstrate that approximately 70% of firms exhibit an ultimate control value of 1. Additionally, our analysis reveals a non-linear relationship between the ultimate control, the tunneling behavior of the ultimate controller, and the executives’excess perk consumption .Specifically, our findings suggest that this relationship is characterized by a phase transition.

The general financial theory predicts a carbon premium, as brown stocks bear greater uncertainty under climate transition. However, a contrary green premium has been identified in China, as evidenced by the return spread between green and brown sectors. The aggregated climate transition sentiment, measured from news data using a large language model, explains 12%-33% of the variability in the anomalous alpha. This factor intensifies after China announced its national commitments. The sentiment-driven green premium is attributed to speculative trading by retail investors targeting green “concept stocks.” Additionally, the discussion highlights the advantages of large language models over lexicon-based sentiment analysis.

Comprehensive evaluation and identification of the critical regulatory determinants of carbon emission efficiency (CEE) are very important for China’s low-carbon transition. Accordingly, this paper first employs an undesirable global super-hybrid measure approach to calculate the CEE of China’s iron and steel industry (ISI). We then further use spatial error and threshold regression models to examine the spatial and non-linear effects of heterogeneous environmental regulations on CEE, respectively. Our empirical results show that (1) CEE varies significantly across China’s regions, with the eastern region having the highest CEE score, followed by the western and central regions, with the northeast region ranking the lowest; (2) command-and-control and market-incentive regulations both promote CEE, whereas the public participation approach does not significantly contribute to performance gains; (3) all three types of environmental regulations exhibit a non-linear threshold effect on CEE; (4) openness level, technological progress, and industrial concentration enhance efficiency gains, while urbanization level exerts a negative impact on CEE. Our findings have important implications for the design of environmental regulations.

Biodiversity conservation incurs substantial economic costs. We investigate how financial markets price the risks such costs induce, exploiting the “Green Shield Action,” a major regulatory initiative launched in China in 2017 to enforce biodiversity preservation rules in national nature reserves. While improving biodiversity, the initiative led to significant increases in bond yields for municipalities with these reserves. The effects are driven by increases in local governments’ fiscal risk due to expected increases in transition costs resulting from shutting down illegal economic activities within reserves and additional public spending on biodiversity. Investors show little non-financial consideration towards endeavors counteracting biodiversity loss.

This paper explores the factors that influence redistributive preferences in the context of significant economic transformation, focusing on the transition premium and growth. Using an online survey experiment with a nationally representative sample from China, we find that priming getting rich via relatively less meritocratic, yet representative ways under market transition in post-reform China reduces redistributive support, specifically for policies that aim to take from the rich and the belief in the government’s duty to redistribute, indicating the presence of a set of fairness views in China that deviate from the conventional meritocratic paradigm. Heterogeneous treatment effects analyses reveal that such non-meritocratic fairness views are a general phenomenon, and self-interest in the form of subjective economic pressure only serves as a secondary concern. While people feel that the rich are more deserving and demand less redistribution regardless of subjective economic pressure, only those under less economic pressure exhibit decreased support for policies that aim to help the poor. These representative ways of getting rich under market transition are similarly fair compared to winning a lottery, far less fair than a self-made entrepreneur, but much more legitimate than acquiring wealth through corruption. Priming China’s growth story does not result in statistically significant changes in redistributive support. Additionally, we rule out the influence of three relevant confounders: low tax salience, preference falsification under authoritarianism, and misperceptions about relative income positions and intergenerational occupational mobility. We argue that such non-meritocratic fairness views are particularly salient in societies that break away from a centrally-planned economic system in the past and transition towards a high-growth market economy, where economic opportunities are becoming more inclusive.

Quantum theory provides a comprehensive framework for quantifying uncertainty, often applied in quantum finance to explore the stochastic nature of asset returns. This perspective likens returns to microscopic particle motion, governed by quantum probabilities akin to physical laws. However, such approaches presuppose specific microscopic quantum effects in return changes, a premise criticized for lack of guarantee. This paper diverges by asserting that quantum probability is a mathematical extension of classical probability to complex numbers. It isn’t exclusively tied to microscopic quantum phenomena, bypassing the need for quantum effects in returns.By directly linking quantum probability’s mathematical structure to traders’ decisions and market behaviors, it avoids assuming quantum effects for returns and invoking the wave function. The complex phase of quantum probability, capturing transitions between long and short decisions while considering information interaction among traders, offers an inherent advantage over classical probability in characterizing the multimodal distribution of asset returns.Utilizing Fourier decomposition, we derive a Schr¨odinger-like trading equation, where each term explicitly corresponds to implications of market trading. The equation indicates discrete energy levels in financial trading, with returns following a normal distribution at the lowest level. As the market transitions to higher trading levels, a phase shift occurs in the return distribution, leading to multimodality and fat tails. Empirical research on the Chinese stock market supports the existence of energy levels and multimodal distributions derived from this quantum probability asset returns model.

Climate change shocks pose a threat to the stability of the financial system. This study examines the influence of climate risks on systemic risk in the Chinese market by utilizing extreme risk spillover network. Moreover, we construct climate risk indices for physical risks (abnormal temperature), and transition risks (Climate Policy Uncertainty). We demonstrate a significant increase in systemic risk due to climate risks, which can be attributed, in part, to investor sentiment. Furthermore, institutional investors can mitigate the adverse impact of climate risks. Our findings suggest that policymakers and investors need to exercise greater vigilance in addressing climaterelated adverse effects.

This paper reconciles the debates on carbon return estimation by introducing the concept of equity duration. We demonstrate that emission level and emission intensity yield divergent results for green firms, driven by inherent data problems. Our findings reveal that equity duration effectively captures the multifaceted effects of carbon transition risks. Regardless of whether carbon transition risks are measured by emission level or emission intensity, brown firms earn lower returns than green firms when the equity duration is long. This relationship reverses for short-duration firms. Our analysis underscores the pivotal role of carbon transitions’ multifaceted effects on cash flow structures in understanding the pricing of carbon emissions.