Using a sample of 870 completed M&A deals conducted by developed-country acquirers from 2002-2021, this paper examines the following questions at the country and city levels, respectively: First, whether China’s environmental regulation system i.e., government environmental regulations (GER) and civil environmental regulations (CER), has an impact on the M&A location choices of developed-country acquirers and the moderating role that the acquirers’ carbon risks will play in the process of the above impact. Second, whether the carbon risks of acquirers from developed countries entering China have an impact on carbon emissions in target regions, and the moderating role would be played by the environmental regulation system in the target regions in the process of the above impact. Our main conclusions are as follows: First, in terms of the deterrent effect on developed-country acquirers, country-level environmental regulation systems are more significant deterrents to M&A in target regions than city-level ones. Second, higher carbon risks of acquirers significantly increase carbon emissions at the country level, however, this effect is not significant at the city level; moreover, neither country nor city-level environmental regulations can weaken the effect of higher carbon risk of the acquirers on carbon emissions in the target area. Our results reflect the characteristics of China’s authoritarian environmental regulation system: First, environmental regulations at the country level often have a greater deterrent effect than those at the city level, Second, environmental regulations in China suffer from the problem of “loud thunder but little rain”, i.e., although environmental regulations have many measures and thus a high deterrent effect, the results are poor.

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