Environmental policy uncertainty and green transformation dilemma of Chinese enterprises.

With the intensification of environmental issues, environmental policies have played an increasingly important role in the Chinese economic system. The previous literature focuses on the impact of environmental policies on the green transformation of enterprises but pays little attention to policy-related environmental risks. In this way the impact of environmental policy uncertainty on enterprise green transformation remains a black box, which forms the initial motivation of this essay. In this study, under the real options theory assumption, we use Word2vec machine learning technology and text information from the annual reports of Chinese listed companies to measure environmental policy uncertainty at the enterprise level and examine its impact on enterprise green transformation and mechanism. Results indicate that environmental policy uncertainty has a significant negative impact on the green innovation and total factor productivity of the Chinese enterprises, which can lead to a green upgrading dilemma. The mechanism analysis shows that EPU suppresses enterprise green transformation by crowding out research and experimental development investment and intensifying enterprise financialization. In addition, The moderating effect analysis reveals that strong external market competition, capital market attention, and environmental information transparency can alleviate the negative impact of environmental policy uncertainty on enterprise green transformation to a certain extent. Furthermore, the short-sighted behavior of enterprise management can strengthen the negative impact of environmental policy uncertainty on green transformation. Finally, policy implications are provided to shed light on this essay's theoretical and practical values: the government should maintain the clarity, consistency, and stability of environmental policies to provide strong guarantees for the green transformation of enterprises.This paper broadens the scope of research on green transformation, offers new development philosophy for enterprises' green transformation, and provides new directions for the synergistic development of environmental policies and green transformation.