With　the　increasingly　stringent　global　restrictions　on　carbon　emissions,　firms　are　facing　growing　carbon　risks,　which　may　not　only　drive　up　firms＇　pollution　control　costs　but　also　force　them　to　improve　investment　efficiency　by　optimizing　investment　and　saving　costs.　Taking　the　Paris　Agreement　event　as　the　background　and　using　the　data　of　listed　companies　in　China　from　2007　to　2020　and　a　difference-in-differences　model,　this　paper　reveals　that　the　increase　in　carbon　risk　can　significantly　improve　the　investment　efficiency　of　China＇s　carbon-intensive　firms.　In　addition,　we　find　that　the　increase　in　carbon　risk　can　encourage　firms　to　carry　out　mergers　and　acquisitions　to　improve　investment　efficiency.　Our　findings　provide　Chinese　evidence　for　the　effective　link　between　carbon　risk　and　firm　investment　efficiency　and　may　serve　as　a　decision-making　reference　for　carbon-intensive　enterprises　to　improve　investment　efficiency　through　merger　and　acquisition　activities　in　the　context　of　increasing　carbon　risk.　©　2024　Elsevier　Inc.