The impact of climate transition risk on firms’ cross-regional investment

Climate transition risk has emerged as a critical factor in shaping firms’ strategic deployment in the context of sustainable development. Drawing on data from China from 2011 to 2022, this study examines the impact of climate transition risk on firms’ cross-regional investment. The results indicate that climate transition risk significantly promotes firms’ cross-regional investment. The underlying mechanisms include the motivation to mitigate local regulatory pressure and pursue diversified expansion in other regions. Firms with weaker green innovation capabilities, higher concentration in polluting businesses, stronger operational capabilities, and more extensive investment experience are more inclined to engage in cross-regional investment. This study enriches the literature on the economic consequences of climate transition risk and provides a factual basis for firms to optimize their spatial deployment.