Environmental Regulations, Environmental Subsidies and Enterprise Investment for Environmental Protection: Evidence from Pollution Enterprises of China

Abstract

Environmental protection concerns the global and long-term development of the social economy. The negative effects of production and management activities of pollution enterprises on the environment attract more and more attention from the whole society. The government is not only continuously strengthening production regulation, responsibility monitoring and establishment of rules and regulations of pollution enterprises, but also increasing supports to environmental-friendly development of pollution enterprises. To explore influences of environmental regulations and environmental subsidies on enterprise investment to environmental protection, influences of environmental subsidies under environmental regulations were discussed through the propensity matching using data of listed enterprises in China’s pollution industry from 2013 to 2019. Results demonstrate that environmental subsidies promote the growth of enterprise investment to environmental protection significantly and environmental regulations are the primary influencing factor. According to heterogeneity analysis, environmental subsidies have significant positive effects on the investment in environmental protection of state-owned enterprises and private enterprises. The quantity and amplitude of investment in environmental protection of state-owned enterprises are more prominent. Environmental subsidies significantly promote investment in environmental protection of enterprises where senior executives have a technological background, but they have no significant influences on enterprises where senior executives have no technological background. Conclusions have some policy significance: government urges pollution enterprises to increase investment in environmental protection and pursue sustainable development from perspectives of incentives (increasing economic subsidies) and pressure (developing collaborative effect of environmental regulation).