The impact of factor market distortions on profit sustainable growth of Chinese renewable energy enterprises: The moderating effect of environmental regulation

Abstract

Strengthening environmental regulation (Reg) is an important measure to solve energy and environmental problems, then to realize the profit sustainable growth (Gro). Taking 116 listed renewable energy enterprises in China from 2010 to 2019 as samples, this paper uses FE and SYS-GMM models to examine the moderating effect of three types of Reg in the relationship of factor market distortions (Dist) and the Gro. The conclusions are as follows: For the direct impact, capital and labor market distortions (DistK and DistL) hinder the Gro. Specifically, the absolute value of the coefficient of DistK in state-owned enterprises (SOEs) is greater than that of the DistL, which indicates that the inhibitory effect of DistK in SOEs is more significant. For the indirect impact, the coefficients of economic and supervised environmental regulation (RegE and RegS) are positive and significant, and promote the Gro of SOEs and non-SOEs, while legal environmental regulation (RegL) is the opposite, which shows that Reg has significant “cost effect” and “rebound effect”. Moreover, Reg has a positive moderating effect, which is mainly reflected in SOEs, and alleviates the inhibitory effect of DistK and DistL on Gro to a certain extent. Finally, this paper puts forward some targeted policy suggestions.