金融与财务学系列讲座之333期

Time：14:00-15:30, Wednesday, April 22, 2026

Location: Room 603, Starr Building（史带楼603室）

Host： Prof. Junye Li （李隽业 教授）

Department of Finance, FDSM

Topic: The Green Reallocation Paradox: Do Capital Investments Abandon Polluting Industries?

Speaker: Prof. Hong Zhang (张弘 教授)

Singapore Management University

Abstract: The literature proposes various mechanisms to discipline corporate pollution, but do capital investments subsequently abandon polluting industries? We document a striking paradox. External capital markets continue to allocate more capital to stand-alone firms in highly polluting industries. In contrast, multisector firms reduce investment in pollution-intensive, peripheral segments, indicating within-firm green reallocation. Exploiting quasi-exogenous environmental incidents supports a causal interpretation. Standard mechanisms—regulation, environmental pressure, cost of capital, and financial constraints—fail to induce market-wide divestment but strengthen internal reallocation. These patterns are consistent with a model in which binding internal budget constraints translate compliance costs into reduced investment. Our findings reveal a critical limitation of existing environmental disciplining mechanisms and highlight internal capital markets—not external financial markets—as the central arena for real-sector environmental capital reallocation.

Bio: Professor Hong Zhang is currently the Keppel Professor in Financial Economics at Singapore Management University (SMU) and the director of the Sim Kee Boon Institute (SKBI) for Financial Economics. Before joining SMU, he was the Phoenix Chair Professor of Finance at PBC School of Finance, Tsinghua University, and had also worked at INSEAD and Cheung Kong Graduate School of Business (CKGSB). Professor Zhang's research covers a broad range of topics, including investments, corporate finance, international finance, institutions and culture, and green finance. His recent work explores the influence of big data, leverage, and behavioral environmental policy uncertainty. His research is widely published in top finance journals such as the Journal of Finance, Journal of Financial Economics, and Review of Financial Studies.