How does the Paris Agreement affect firm productivity? International evidence

Using the event study method, this study examines how the Paris Agreement affects firm pro-ductivity in the long and short term. With a sample of global listed firms from 2013 to 2020, we find that in the short term, the Paris Agreement has a negative "impact effect" on firms' total factor productivity (TFP). However, in the long term, it shows a positive "optimization effect" on firms' TFP. Furthermore, economic policy uncertainty and firms' risks mediate the effect of the Paris Agreement on firms' TFP in the short term; while green innovation mediates its effect in the long term.