How Carbon Emissions Trading Improves Corporate Carbon Performance: Evidence from China with a Moderated Chain Mediation Analysis

Against the backdrop of global climate governance and China’s “dual carbon” goals, carbon emissions trading (CET) has become a core policy instrument for promoting low-carbon transformation. However, it remains unclear whether CET policies can effectively improve corporate carbon performance and, more importantly, through which micro-level mechanisms such effects operate within firms. To address these gaps, this study applies a difference-in-differences (DID) approach to examine the impact of CET policy on corporate carbon performance and its transmission pathways. The results show that CET policy significantly enhances corporate carbon performance. Heterogeneity analysis further reveals that this positive effect is more pronounced in regions with lower environmental governance intensity, and that the policy’s effectiveness strengthens over time. Mechanism tests indicate that financing constraints and R&D investment serve as chain mediators: CET policy alleviates financing constraints, stimulates R&D investment, and thereby improves carbon performance. Moreover, the moderating effect analysis shows that executives’ green backgrounds reinforce the policy’s effectiveness by further easing financing constraints and mitigating their negative impact on R&D investment. Overall, these findings deepen the micro-level understanding of market-based environmental regulation and provide policy implications for optimizing CET policy design, improving resource allocation efficiency, and fostering low-carbon transformation and sustainable competitive advantages for enterprises.