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ABSTRACT Accurately grasping the logic of corporate valuation and ensuring that stock prices revert to their fundamental levels constitutes a central mechanism through which capital markets fulfill their allocative function. In emerging markets characterized by pervasive information asymmetry and behavioral biases among investors, identifying policy instruments that can effectively enhance pricing efficiency is of particular importance. Using a panel of Chinese A‐share listed firms from 2008 to 2023, this study employs a multi‐period difference‐in‐differences (DID) framework to investigate how Green Factory certification influences stock mispricing. The results show that Green Factory certification significantly mitigates stock mispricing, and this finding remains robust across a series of validations—including parallel trend tests, placebo analyses, heterogeneous treatment effect estimations, and machine‐learning‐based robustness checks. Mechanism analysis reveals that the certification primarily operates through three channels: alleviating financing constraints, enhancing information transparency, and improving corporate governance. The effect is more pronounced among firms in heavily polluting industries, firms lacking political connections, and those with a lower share of institutional ownership. Furthermore, the certification not only offsets the adverse impact of policy uncertainty but also exerts an even stronger corrective influence on stock mispricing under such conditions. Overall, this paper uncovers the micro‐level mechanism through which voluntary environmental regulation improves the pricing efficiency of capital markets and provides practical implications for optimizing and extending the Green Factory policy.
Wang et al. (Wed,) studied this question.