Abstract
This study mainly investigates the nexus of environmental protection tax and corporate environmental investment using a quasi-natural experiment and the difference-in-difference method. On the basis of 422 Chinese listed enterprises from 2012 to 2020, empirical results show that environmental protection tax has significantly reduced corporate environmental investment in China. In terms of mechanism, environmental protection tax inhibits corporate environmental investment through the financing constraints and the substitution effect of innovation investment. In terms of heterogeneity, environmental protection tax has a significant inhibitory effect on environmental investment for large firms, state-owned firms, and firms located in cities with strict regulations and economically developed cities. Environmental protection tax has a negative effect on corporate environmental investment, mainly through direct effect, innovation substitution effect, and financing inhibition effect.
Highlights
Literature ReviewExisting studies generally agree that different types of environmental regulatory instrument, such as environmental protection taxes, can have some effects on corporate environmental investments
Research Center of the Central China for Economic and Social Development, School of Economics and Management, Nanchang University, Nanchang 330031, China; Abstract: This study mainly investigates the nexus of environmental protection tax and corporate environmental investment using a quasi-natural experiment and the difference-in-difference method
The results show that the coefficient of Environmental protection tax (ET) × Treat is significantly negative regardless of the inclusion of control variables, indicating that the implementation of environmental protection tax has a suppressive effect on corporate environmental protection investment (EPI)
Summary
Existing studies generally agree that different types of environmental regulatory instrument, such as environmental protection taxes, can have some effects on corporate environmental investments. Huang et al [14] used panel data of Chinese listed firms from 2008 to 2016 to conduct a regression analysis and applied the instrumental variables approach to address the endogeneity problem. Song et al [23] found that, in terms of corporate ownership, SOEs are politically linked and have a greater advantage in market-based environmental regulation constraints compared with non-SOEs. From the review and discussion above, the significant effect of regional and firm heterogeneity on this study can be found. This study will further investigate the effect of environmental protection tax reform on corporate environmental investments in different regions and firms in the background of China’s reality, such that the findings can be closer to it
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