High-polluting Enterprises Research Articles

Green M&A dilemma: Unravelling the impact on high polluting enterprises’ performance

This paper investigates the impact of green mergers and acquisitions (M&As) on shareholder value within High Polluting Enterprises (HPEs). Analyzing 1,840 M&A transactions involving listed HPEs in China from 2012 to 2020, our study reveals a substantial decline in HPEs' performance post-green M&As. This effect is particularly pronounced among non-state-controlled HPEs, those with fewer financial constraints, and those with lower ESG performance. Additionally, channel analysis indicates that HPEs witness poorer post-green M&As performance when making higher cash payments or offering a premium. Overall, our findings suggest that HPEs may prioritize environmental goals in green M&As, potentially compromising shareholder value.

Does the issuance of green bonds promote green practices among peer companies? Evidence from China's listed companies

In China's green finance system, green bonds, which strive to achieve balanced development of ecological and economic goals, play a key role in promoting sustainable development. Using ESG data on Chinese listed companies from 2009 to 2022, this paper examines whether green bonds issued by companies encourage their peers to adopt green practices. And then, based on the multi-temporal Difference-in-Differences (DID) approach, this paper explores the underlying mechanisms and heterogeneous effects of this peer influence. The results show that green bond issuance has a significant positive impact on the green practices of peer companies, and its robustness has been confirmed through various tests. Peer effects are primarily driven by competition and access to information, which is particularly evident in highly competitive industries and companies with common institutional investors. In addition, the impact of green bonds issued by industry leaders or high-polluting enterprises will be greater. In order to promote sustainability in different business types and regions, specific policy implications are provided based on these insights: strengthening the green bond guarantee system, fostering market leadership, and implementing targeted regulations.

Impact of artificial intelligence technology applications on corporate energy consumption intensity

Artificial intelligence (AI), as a new technology, not only revolutionizes economic development, but also provides an opportunity for environment governance. Extant studies primarily explore the environmental performance of AI from a macro perspective, while evidence on how AI technology applications affect firms’ energy-saving behavior is scarce. Employing Python technology to recognize AI-related keywords in the annual reports of listed enterprises and adopting data on corporate energy consumption from 2011 to 2020, we explore the impact of AI on corporate energy consumption intensity (CECI) and its mechanisms. We observe that AI technology applications reduce CECI. After a range of robustness tests, the conclusions are still solid. The mechanism analysis reveals that AI cuts CECI through spurring firm green innovation, stimulating firms to introduce new equipment, and reducing firms’ internal management costs. Heterogeneity analysis reveals that this negative impact is more prominent for SOEs and private enterprises’ energy intensity; we also find that this effect is more pronounced for high-tech industry enterprises and high-polluting enterprises. Our findings provide micro evidence for policymakers to reduce corporate energy intensity and realize energy conservation and emission abatement targets.

Green finance policy and exploratory and exploitative green innovation: evidence from high-polluting enterprises in China

Green finance policy and exploratory and exploitative green innovation: evidence from high-polluting enterprises in China

The impact of low-carbon city pilot on carbon emissions of high-polluting enterprises − Based on financing constraint perspective

As the major contributor to climate change, enterprises in high-polluting industries have a large deal of potential to reduce their carbon emissions, and the efficacy of that reduction is correlated with the nation's overall environmental pollution and climate change. As a comprehensive environmental regulation policy, whether the low-carbon city pilot (LCCP) can promote the carbon emission reduction of high-polluting enterprises remains to be verified. Based on the data of all high-polluting listed companies in China during the period of 2010–2020, this study evaluates the implementation effect of the LCCP through the multi-period difference-in-differences model, and conducts a series of robustness tests. In addition, the implementation path, heterogeneity and industry spillover effects of the policy are also studied. The study shows that the LCCP policy significantly reduces the growth rate of carbon emissions of enterprises in high-polluting industries by 1.06 percentage points on average. Financing constraints play a negative moderating role between the LCCP and the growth rate of carbon emissions. The mechanism test demonstrates that the LCCP reduces the carbon emission growth rate of enterprises in high-polluting industries through enterprise technological innovation and increasing environmental protection investment level. Further analysis can also find that the LCCP has a more obvious emission reduction effect on state-owned enterprises and enterprises in areas with lax environmental law enforcement. And there is an economic spillover effect but no industrial spillover effect. In view of this, local governments should play a guiding role in the policy, continue to expand the scale of the LCCP and focus on non-state-owned enterprises to promote the green transformation of high-polluting enterprises. This study offers significant theoretical and practical reference value for the further implementation of environmental regulation in the field of environmental governance and the reduction of enterprise carbon emissions.

How does environmental regulations affect digital green innovation of high-pollution enterprises? Empirical evidence from China

Digital green innovation (DGI) is crucial for high-pollution enterprises to improve green performance. However, there is a paradox regarding the impact of environmental regulations on DGI, primarily due to the varied effects of diverse regulatory tools. To resolve this paradox, based on Neoclassical Economics and the Porter Hypothesis, we empirically examine the influence of heterogeneous environmental regulations on DGI using a sample of high-pollution enterprises in China. The conclusions indicate that environmental protection tax has a pushing-forward effect on DGI, while environmental protection subsidy has a crowding-out effect. Moreover, enterprises' resource base and technological innovation capability positively moderate the impact of environmental protection tax. External pressure, internal incentives, pandering to governments, and managerial opportunism have mediating effects. Our research offers a new perspective to resolve the paradox of the effect of environmental regulations on DGI, explores potential mechanism as well as boundary condition, and proposes a new way of measuring DGI of enterprises with patents. Accordingly, we offer valuable policy recommendations about the formulation of environmental regulations, the facilitation of DGI, and the advancement of China's ecological civilization.

ESG Performance, Firm Heterogeneity, and the Speed of Dynamic Adjustment of Capital Structure: Evidence from China

This study aims to investigate the differences in the impact of ESG (environmental, social, and governance) performance on the speed of capital structure adjustment (SOA) across different types of A-share Chinese companies between 2018 to 2022. The research findings, obtained by using LSDVC method, suggest that among the three dimensions of ESG, an improvement in G has the most significant effect on SOA, followed by the E dimension. Furthermore, after distinguishing between different types of enterprises, it is evident that high-polluting enterprises are most affected by both E and G dimensions in terms of their influence on SOA compared to overall manufacturing and service industries.

Green innovation: a key strategy for enterprises and countries to gain a competitive edge in the global market

ABSTRACT Green innovation (GI) is an essential part of enterprises and countries for gaining a prior position in the global market. This study aims to investigate the nexus between the Five-Year Plan command-and-control environmental regulation (ER), GI, and global competitiveness. This research investigates the Five-Year Plan command-and-control environmental regulation's impact on high-polluting firms, research and development investments, and environmental concerns, exploring how emission reduction promotes innovation for global competitiveness. The Resource-Based View theory is employed to analyze how unique resources, such as the environmental Five-Year Plan and strategic research and development investments, lead to sustainable competitive advantages. The study gathered data from China Stock Market & Accounting Research, China's statistical yearbook, and Inco Pat databases, employing a continuous Difference-in-Differences (DD) model to assess the Five-Year Plan command-and-control ER's impact on GI Quality. Instruments included GI Quality, Official Promotional Pressure, financial development, and control variables. The findings highlight positive correlations between the Five-Year Plan command-and-control ER and GI, increased research and development investments in high-polluting enterprises, and the beneficial impact of local government commitment to economic development (ED). The practical implications guide enterprises in leveraging the Five-Year Plan command-and-control ER and research and development investments for enhanced competitiveness, while the theoretical contribution lies in illustrating how environmental initiatives serve as valuable strategic resources within the Resource-Based View framework. Researchers, policymakers, and businesses interested in leveraging environmental initiatives for competitive advantages would benefit.

How does China's green credit policy affect the innovation of high-polluting enterprises? From the perspective of innovation quantity and quality.

Employing the "Green Credit Guidelines" implemented in 2012 as the basis for a quasi-natural experiment, this study applies the method of Difference-in-Differences(DID) to investigate the influence of the Green Credit Policy on both the quantity and quality of enterprise innovation. The outcomes of our analysis reveal that the policy has significantly boosted both the quantity and quality of innovation among enterprises identified as heavy polluters. It is noteworthy that the policy's positive impact on innovation quantity surpasses its positive effect on innovation quality. This substantiates that the Green Credit Policy effectively generates incentivizing outcomes for innovation among the heavy polluters, thereby verifying Porter's hypothesis within the domain of green credit in China. Furthermore, we find that the positive impact is more significant for enterprises with lower innovation capabilities, large-scale enterprises, state-owned enterprises, and those situated in both the Eastern and Western regions. Through these findings, this study illuminates a novel perspective on the interplay between the Green Credit Policy and enterprise innovation dynamics in China.

Green credit, financing constraints, and corporate investment: From the perspectives of scale and efficiency

Green credit plays a crucial role in resource allocation as it serves as a link between financial systems and environmental protection. This study utilizes the “Green Credit Guidelines” issued by the China Banking Regulatory Commission in 2012 as an exogenous shock, employing the Difference-in-Differences (DID) approach to examine the impact of green credit policies on corporate investment levels. The findings reveal that green credit enhances investment efficiency by reducing the investment scale of high-pollution enterprises. Furthermore, considering the temporal nature of policy impact and strategic responses from enterprises, these effects become evident and increasingly strengthened two years after policy implementation. The financing constraint intermediary mechanism suggests that financing constraints only serve as an intermediary factor between green credit policies and investment efficiency, exerting relatively weak control over short-term investment scales. Additionally, internal and external regulatory mechanisms along with enterprise heterogeneity indicate asymmetric effects resulting from green credit policies. Policy implications derived from this research emphasize the necessity for a rational combination of command-and-control environmental regulations with green credit policies while also improving upon existing green credit measures to prevent strategic corporate behavior.

Environmental, social, and governance performance and corporate debt maturity in China

The prevalence of over-holding short-term debt is widespread among Chinese companies. This study aims to explore the intricate association between environmental, social, and governance (ESG) involvement and corporate debt maturity. Utilizing data from samples of publicly listed Chinese firms from 2011 to 2021, we observe a positive correlation between ESG performance and the long-term debt ratio of enterprises. Importantly, the marginal effect of ESG on debt maturity is obvious for enterprises exhibiting higher levels of ESG performance. Rigorous robustness checks, meticulous treatment of endogeneity, and the application of random forest prediction techniques substantiate the aforementioned conclusions. Heterogeneity analysis unveils that state-owned enterprises, enterprises with low investor attention, high-polluting enterprises, and those subject to stringent government environmental governance derive greater benefits from ESG enhancement. Mechanism analysis further elucidates that the causal relationship between ESG performance and debt maturity may be attributed to the ameliorating effects of ESG on information asymmetry, default risk, and innovation activities. Finally, our study discerns that the improved debt maturity resulting from the ESG effect signifies a noteworthy mitigation in firms' maturity mismatch. This investigation contributes novel empirical evidence to comprehending the implications of ESG and alleviating the debt maturity mismatch in enterprises characterized by an over-reliance on short-term debt.

Can green bonds promote corporate green technology innovation?——evidence from China

ABSTRACT The development of green finance is of great significance in promoting industrial transformation and upgrading, advancing the sustainable development of the regional economy, and realizing the goal of ‘double carbon’. To explore the effect of green bonds on corporate green technology innovation, this paper uses 856 quarterly data from 45 A-share listed companies that issued green bonds in China from 2016 to 2020, and establishes a double fixed-effects model to test the impact and mechanism of green bonds on corporate green technology innovation. The results show that the issuance of green bonds by enterprises can significantly promote green technological innovation of enterprises, and the promotion effect of green bonds on strategic green innovation is stronger compared with substantive green innovation; this promotion effect is more obvious in regions with high polluting enterprises and better bank competitiveness. Further analysis reveals that green bonds promote green technological innovation mainly by reducing the agency cost and financing cost of enterprises; the degree of equity checks and balances will weaken the promotion effect of green bonds on enterprises’ green technological innovation.

The impacts of green credit policy on green innovation of high-polluting enterprises in China

This paper assesses the effects of the Green Credit Guidelines (GCG) 2012 on the green innovation of high-polluting enterprises (HPEs) in China. We find a significant increase in utility patents following the GCG 2012, indicating a surge in incremental green innovation. However, the policy's impact on invention patents remains marginal, pointing to a dominant trend of compliance-oriented innovation rather than fundamental technological breakthroughs. We find there is long-term effect of GCG 2012 which may be attributable to the enhanced rigor of policy implementation. Additionally, we document that HPEs reduced financial asset investments in anticipation of more stringent credit conditions.

The Effect of Green Credit on Enterprises’ Green Transformation under Sustainable Development: Evidence from Green Innovation in High-Pollution Enterprises in China

How to help enterprises reduce pollution and transform into environmentally friendly enterprises through financial channels is an important issue that needs to be urgently addressed. This study constructs a quasi-natural experiment based on the implementation of the 2012 Green Credit Guidelines and evaluates the impact of green credit policy on green transformation in high-pollution enterprises from the aspect of green innovation. The research results found the following: (1) After the implementation of green credit policy, the quantity and quality of green innovation in high-pollution enterprises have significantly improved. (2) To avoid the inaccuracy of research conclusions caused by differences in sample characteristics, this study used the PSM-DID model to verify the promoting effect of green credit policy on the green transformation of high-pollution enterprises. (3) Furthermore, this study analyzed the impact of differences in the ownership nature of enterprises and regional financial development levels on the green transformation of high-pollution enterprises under green credit policy. The results show that green credit policy has a stronger impact on the green innovation of state-owned high-pollution enterprises and high-pollution enterprises in underdeveloped financial areas. The findings of this study provide an important reference for the reform of green finance of government departments.

OLS-Based Research on the Impact of Green Finance on Green Development——Taking Beijing as an Example

The Green Credit Policy (GCP) and the Green Finance have brought tremendous influence to the promotion of industry. Green development is an approach to economic growth that considers both economic benefits and environmental protection, but because it requires significant investment to build a green industry, the recovery process is time-consuming and fraught with risk, so there is insufficient incentive for urban green development. Through specialized financing services for environmental protection firms and high-polluting companies, green finance may support the green transformation of high-polluting enterprises. This paper uses OLS estimation to evaluate the Green Development effect of GCP. Green development is significantly impacted by GCP. And Green Financial Level(gfl)’s index has a strong positive covariance with Green Development Level(gdl). Based on these results, we suggest that: The Chinese Government should promote GCP and make further efforts to perfect our industrial structure. Nations, including China, are actively promoting green finance to foster sustainable economic growth and protect the environment. China's efforts in developing green finance are crucial for realizing its ecological civilization. Green finance is a key aspect of promoting sustainable development. It is hoped that the Chinese government will offer stronger support in this field by establishing effective systems and regulations. Encouraging more financial institutions to participate in green finance will ultimately lead to sustainable economic and environmental progress.

ESG performance and corporate solvency

This paper selects A-share listed companies in 2018–2022 as a research sample and examines the relationship between ESG performance and listed companies' solvency. It is found that the company's current ESG performance is positively correlated with its current solvency, and there is no lag; the correlation between high-pollution enterprises for solvency and ESG performance is more potent than that of non-high-pollution enterprises.

Does environmental regulation improve firms' export product quality? Empirical evidence based on China's key regional air pollution and control policy

Promoting high-quality export development is a crucial strategic decision for economic transformation and upgrading. However, the effects and potential mechanisms of environmental regulations on firms' export product quality remain a subject of debate. This study investigates the impact of environmental regulations on firms' export product quality by analyzing firm-level data from 2000 to 2013. The study employs a quasi-natural experiment that focuses on the Key Air Pollution Control Zone (KRAPC) implemented by the central government in 2010. We found that environmental regulations, as represented by this policy, significantly enhance the firms' export product quality. At the macro perspective, this improvement primarily stems from the reduction of air pollution in the designated areas, and advancements in regional innovation and human capital. At the micro perspective, the main mechanisms are the reallocation of resources and the “Porter effect”. The former mainly involves reducing the production scale or even withdrawing high-energy-consuming and high-polluting enterprises, resulting in improved export product quality among new market entrants. The latter is manifested through enhanced enterprise innovation abilities, increased productivity, and reduced production costs. Furthermore, the impact of the KRAPC policy on firms’ export product quality varies depending on factors such as ownership, size, and technology intensity. In addition, the policy has positive spillover effects on neighboring non-key areas. Therefore, this study supports the government in formulating a scientific environmental policy that promotes a mutually beneficial relationship between economic growth and environmental protection.

Digital transformation and metal enterprise value: Evidence from China

Digital transformation (DT) has become a new driving force for enterprise development, and whether it can promote the value enhancement of high-polluting enterprises such as metal enterprises is still unknown. Taking Chinese listed metal enterprises from 2001 to 2020 as an example, this study collects the keywords “DT” in the annual reports of metal enterprises with the help of crawler technology, and builds an econometric model to empirically test the impact of DT on the value of metal enterprises and its mechanism. According to the study, DT dramatically raises the value of metal firms. This enhancement effect is more pronounced for metal enterprises located in the western region and those with leverage ratios that fall within the acceptable range. These findings still hold after mitigating the endogeneity problem and undergoing robustness tests. Mechanism tests show that DT can enhance the internal incentives for metal enterprises through increased R&D investment and strengthen the external pressure faced by metal enterprises through increased media attention to promote the value of metal enterprises. Moreover, DT can alleviate the financial risk of metal companies and improve resource allocation efficiency, thus promoting the value of metal companies. This study provides valuable references for metal firms to utilize digital technology better to support high-quality development.

Commercial System Reform, Enterprise Green Innovation and Enterprise ESG Performance

Taking the commercial system reform implemented in recent years as a “quasi-natural experiment”, this paper systematically examines the relationship between commercial system reform and enterprise ESG performance and analyzes the intermediary effect of enterprise green innovation between the two, based on the data of China’s commercial system reform and A-share listed companies in 2011–2021. The results show that the implementation of commercial system reform improves the level of ESG performance of enterprises, and green innovation of enterprises plays a positive role in the impact of commercial system reform on ESG performance of enterprises. After passing several robustness tests, the results of this paper are still valid. The results of the heterogeneity test show that the implementation of commercial system reform plays a greater role in promoting the ESG performance of state-owned enterprises, high-tech enterprises, high-financing-constraint enterprises, and high-pollution enterprises. The conclusions of this paper provide certain enlightenment for further promoting the reform of the commercial system and the construction of the ESG system and promoting enterprises to improve the level of modern green governance.

Research on the Impact of Green Credit Policy on Corporate Environmental Social Responsibility

Since the 1970s, my country's industrialization process has continued to advance. However, with the improvement of economic level, the contradiction between my country's economic growth and environmental protection has become increasingly prominent. Green development has become an important principle guiding the high-quality development of my country's economy in the new era. In response to increasingly severe environmental problems, my country promulgated the "Green Credit Guidelines" in 2012, requiring financial institutions to include enterprises' environmental performance into credit review standards, implement differentiated credit interest rates for different enterprises, and raise the threshold for corporate loans. Penal high-interest credit is issued to highly polluting enterprises to limit the blind expansion of pollution-intensive industries. Since debt financing from banks and other financial institutions is the main source of funds for Chinese enterprises, changes in credit principles will inevitably affect the business and development strategies of enterprises. Then, can the green credit policy promote high-polluting enterprises to undertake environmental and social responsibilities? This issue deserves our in-depth study. This article designs a quasi-experimental based on the "Green Credit Guidelines" promulgated in 2012, constructs a difference-in-difference model to study the impact of green credit policies on corporate environmental responsibility levels, and analyzes the transmission mechanism of this impact. At the same time, it analyzes the differentiated impact of the "Green Credit Guidelines" on corporate environmental social responsibility under different enterprise sizes, proportions of institutional investors, regional legal environments, and factor market development levels.