How Environmental Regulation Affects Green Investment of Heavily Polluting Enterprises: Evidence from Steel and Chemical Industries in China

Mo Du, Shanglei Chai (), Shu Li and Zejing Sun
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Mo Du: School of Accounting, Shandong Youth University of Political Science, Jinan 250103, China
Shanglei Chai: Business School, Shandong Normal University, Jinan 250358, China
Shu Li: School of Accounting, Shandong Youth University of Political Science, Jinan 250103, China
Zejing Sun: Business School, Shandong Normal University, Jinan 250358, China

Sustainability, 2022, vol. 14, issue 19, 1-14

Abstract: Environmental protection is the top priority in the development process of all countries in the world, which directly affects public health. In response to growing environmental challenges, the government is implementing increasingly stringent industry supervision and environmental regulations. However, the impact of environmental regulation on investment has not formed a unified conclusion, and few studies have discussed this effect at the micro-enterprise level. This paper uses multiple regression analyses to investigate the effect of environmental regulation on green investments of heavily polluting enterprises in China. Using the data of listed companies in the steel and chemical industries of the Shanghai Stock Exchange and Shenzhen Stock Exchange, we find that the increasing intensity of government environmental regulation will inhibit green investments of heavily polluting enterprises. This paper further classifies the property rights of these enterprises and discusses the role of regional environmental quality. From the perspective of property rights, increased government environmental supervision will inhibit green investments of state-owned enterprises (SOEs) and promote green investments of non-state-owned enterprises (NSOEs). From the perspective of the environmental quality of the region where the company is located, government environmental regulation will inhibit green investments of heavily polluting companies, regardless of the regional environmental quality. This paper not only provides new empirical evidence about the steel and chemical industries for Porter’s hypothesis, but also compensates for the lack of research on the impact of environmental regulation on corporate green investment at the micro-level.

Keywords: environmental regulation; industrial development; green investment; heavily polluting enterprises; low-carbon transformation (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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