Mediation Effect of Corporate Tax Burden and the Relationship between Environmental Regulation and Firm Performance

Qiwen Dai, Huihua Huang, Xiaoqi Zhang (), Yumin Su, Cheyuan Liu and Qiangyi Li
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Qiwen Dai: School of Economics and Management, Guangxi Normal University, Guilin 541004, China
Huihua Huang: The Qinzhou Central Sub-branch of the People's Bank of China, Qinzhou 535099, China
Xiaoqi Zhang: Institute of Economics, Chinese Academy of Social Science, Beijing 100732, China
Yumin Su: School of Economics and Management, Guangxi Normal University, Guilin 541004, China
Cheyuan Liu: School of Economics and Management, Guangxi Normal University, Guilin 541004, China
Qiangyi Li: School of Economics and Management, Guangxi Normal University, Guilin 541004, China

IJERPH, 2022, vol. 19, issue 22, 1-23

Abstract: This paper took the panel data of 1052 heavily-polluting listed companies from both the Shanghai and Shenzhen Stock Exchange from 2010 to 2017 to empirically analyze the impact of environmental regulation (ERG) on firm performance (FP). The article introduces a mediating effect model to test the mediating role of corporate tax burden (ETR) within the relationship between ERG on FP. The results showed that: (1) ERG has exerted a significant enhancement effect on the performance of heavily polluted firms via the ETR reduction mechanism. (2) The mediating effect of ETR depends on the duration of ERG. A significant time lag exists before the mediating effect starts to work, and the magnitude of the mediating effect increases with the time lag from the execution of the ERG. (3) The mediating effect of ETR varies significantly with the nature of corporate property rights. It is significant for the state-owned firms, while for non-state-owned firms, there is no evidence supporting the existence of the mediating effect of ETR despite ERG still having a significant direct-impact on FP. Based on these findings, we discuss the policy suggestion to optimize the impact of environmental regulation policies in terms of incentivizing the green development of polluting firms.

Keywords: environmental regulation; firm performance; corporate tax burden; mediating effect; heavily polluting firms (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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