Air pollution under formal institutions: The role of distrust environment

Abstract

Formal trust is an important formal institution that may significantly impact the environment. This study uses regional distrust environment as a reverse proxy variable for formal trust and studies the impact of formal trust on corporate sulfur dioxide emissions. This study finds that the environment of distrust significantly increases the sulfur dioxide emission levels of enterprises, which means that formal trust affects the environmental management strategies of enterprises. This study also finds that some other formal institutional factors, which include marketization, the development of intermediate organizations, the legal system environment, and GDP levels, have moderating effects on the impact of distrust environment on corporate sulfur dioxide emissions. In addition, climatic conditions including temperature, humidity, and precedence, as well as the location of the enterprise, have certain moderation effects. Mechanism analysis indicates that distrust environment affects corporate sulfur dioxide emissions through the increase in coal sulfur content in enterprise production, the decrease in exhaust gas processing capacity, the reduction in financing capacity, and the decline in social and environmental responsibilities. Finally, this study finds through further analysis that the local government appears to have noticed this negative impact, and the regions with a distrust environment tend to increase their environmental regulation intensity.