["Contemporary Economic Policy, EarlyView. ", "\nAbstract\nThis study employs a multi‐period difference‐in‐differences model to analyze 2009–2022 corporate data, assessing the impact of China's carbon market pilot policy on corporate green governance performance, including environmental disclosure, green innovation, and stakeholder engagement. The policy enhances green governance through two channels by easing corporate financing constraints and stimulating green technology innovation, with results robust to propensity score matching difference‐in‐differences and spatial placebo tests. Notably, effects are stronger for non‐state‐owned enterprises, central‐region firms, and firms led by environmentally proactive executives. We propose tiered carbon pricing and targeted green financing to address regional and ownership‐based disparities, guiding strengthening of market‐based green governance in emerging economies.\n"]