Prevention or ex-post forcing? The impact of dual environmental regulation on corporate environmental behavior

Abstract

Corporate reactions to environmental regulation are the hottest topics in research on corporate environmental behavior. However, a few studies incorporate other environmental behavior into the same framework. By constructing a comprehensive indicator system of dual environmental regulation, this paper uses a comparative analysis to discuss Chinese A-listed corporations' environmental behavior from 2009 to 2017, which were influenced by dual environmental regulation. The study's results show that formal environmental regulation (FER) has a significant U-shaped effect on pre-emptive environmental behavior (PEB) but an insignificant impact on ex-post environmental behavior (NEB). After categorizing the various forms of FER, this study finds that market-incentive environmental regulation has a significant inverted U-shaped effect on NEB but an insignificant impact on PEB, voluntary-participation regulation have a significant U-shaped effect on PEB and an inverted U-shaped effect on their NEB, and command-control regulation has significant influence on neither PEB nor NEB. In addition, informal environmental regulation (IER) has a significantly positive and negative effect on PEB and NEB. This study shows that corporate perceptions of policies can have a positive impact on the interaction between the FER and PEB but a negative impact on the interaction between the IER and PEB, and no impact on the interaction between FER or IER and NEB. Moreover, the impact of FER and IER on corporate environmental behavior (CEB) varies depending on factors like ownership, industry characteristics, the market environment, and regional development. Therefore, governments should understand the choices related to corporate environmental behavior under the dual environmental regulation—formal and informal—and prioritize the synergistic impact of these dual environmental regulation, highlighting their enforceability, and take into account the heterogeneity of their targets and the market to stimulate PEB and decrease NEB to help enterprises align their short-term economic objectives with their long-term social goals.