Abstract
With the increase of environmental supervision in China, environmental protection investment has become an inevitable investment choice for polluting enterprises. However, whether environmental protection investment can bring value to the enterprise has always been a hot topic of debate. The paper takes the 2008-2016 China A-share heavy polluting industry listed companies as the research object, tests the correlation between environmental protection investment and market value. Using the Ohlson valuation model, it is found that environmental investment has a positive impact on the market value. Further, the paper examines two possible paths of environmental investment impact on market value, and the results show that environmental protection investment increases the earnings persistence, but has no significant impact on the cost of equity capital. Therefore, it is concluded that environmental protection investment is conducive to the increase of market value, and the mechanism of environmental protection investment affecting market value is to improve the sustainability of earnings.
Highlights
The report of the 19th National Congress of the Communist Party of China proposed to implement the most stringent ecological environmental protection system, so that a good ecological environment will become a support point for sustained and healthy economic and social development
In order to better understand the value of environmental protection investment and clarify the effectiveness of environmental supervision policies, this paper examines the relationship between environmental protection investment and corporate market value by using A-share listed companies in the heavily polluting industry in 2008-2016 as research samples
The regression results show that the coefficient of intersection of environmental investment and earnings is significantly positive, indicating that environmental investment can increase the valuation multiplier, indicating that environmental investment has a positive effect on the market value of the enterprise
Summary
The report of the 19th National Congress of the Communist Party of China proposed to implement the most stringent ecological environmental protection system, so that a good ecological environment will become a support point for sustained and healthy economic and social development. China’s environmental governance has increased significantly, and government has issued a series of laws and regulations to protection environment. Under the strict environmental supervision system, investment in environmental protection has become an indispensable investment for enterprises
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
