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While corporate green transformation is widely recognized as essential for sustainable development, the internal financial mechanisms shaping firms\u2019 environmental strategies remain insufficiently understood. This study explores how controlling shareholders\u2019 (CSs) equity pledge\u2014a prevalent liquidity mechanism in emerging capital markets\u2014generate nonlinear and threshold\u2010dependent effects on corporate green transformation. We develop a constrained optimization model that embeds financing constraints and control\u2010transfer risks into shareholders\u2019 decision\u2010making. The model formalizes a resource\u2013risk trade\u2010off and predicts a nonmonotonic relationship: Equity pledge initially facilitates green investment by easing liquidity constraints, but beyond a critical threshold, escalating control risk induces short\u2010termism and crowds out substantive sustainability efforts. Using a balanced panel of Chinese A\u2010share listed firms from 2014 to 2023, we empirically confirm a robust inverted U\u2010shaped relationship between equity pledge intensity and green transformation. Further mechanism analyses reveal that financing constraints and digital transformation act as key transmission channels through which this nonlinear effect materializes. Heterogeneity tests indicate that the trade\u2010off is most pronounced among non\u2013state\u2010owned firms, high\u2010pollution industries, and firms with weak external governance. Extending the analysis, we show that although green transformation generally enhances firm value, excessive equity pledge undermines this benefit by amplifying governance risks. By integrating formal modeling with large\u2010sample empirical evidence, this study demonstrates that corporate green transformation emerges from a complex interaction between liquidity incentive and risk constraint. The findings highlight equity pledge regulation as a critical leverage point for stabilizing the financial\u2013environmental nexus in the transition toward low\u2010carbon development.<\/jats:p>","DOI":"10.1155\/cplx\/5815910","type":"journal-article","created":{"date-parts":[[2026,7,31]],"date-time":"2026-07-31T07:34:17Z","timestamp":1785483257000},"update-policy":"https:\/\/doi.org\/10.1002\/crossmark_policy","source":"Crossref","is-referenced-by-count":0,"title":["Equity Pledge and Corporate Green Transformation: Nonlinear Regime Transitions and Threshold Dynamics in a Financial\u2013Environmental 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