Do Fiscal Environmental Protection Expenditures Crowd Out Corporate Environmental Protection Investments?

Yaoxiaoxue Hong, Xianling Jiang, Beibei Shi and Chang Yu ()
Additional contact information
Yaoxiaoxue Hong: School of International Trade and Economics, University of International Business and Economics, Beijing 100029, China
Xianling Jiang: School of International Trade and Economics, University of International Business and Economics, Beijing 100029, China
Beibei Shi: School of International Trade and Economics, University of International Business and Economics, Beijing 100029, China
Chang Yu: School of Economics and Management, Beijing Forestry University, Beijing 100083, China

Sustainability, 2022, vol. 14, issue 20, 1-23

Abstract: This research investigates how fiscal environmental expenditures impact corporate environmental investments and whether corporations act as free-riders. Using a sample of 1688 firm-year observations from 2008 to 2019 in the Chinese context, we observe that fiscal environmental expenditures have a significantly negative “crowding-out” effect on corporate green investments, which is mediated by the disclosure of pollution emissions. Additionally, a heterogeneity analysis reveals that this negative impact is more pronounced for non-heavily polluted and state-owned corporations and corporations located in three major agglomerations. This finding remains robust when employing an instrumental variable approach to address potential endogeneity. Our study contributes to the current literature by providing new insights regarding government environmental protection behaviors’ impacts on corporate green behaviors. The study also provides insights for policymakers to focus more on light-polluting corporations and state-owned corporations, because they have more chances to avoid environmental responsibilities.

Keywords: environmental regulation; mediating effect; green investment; corporate environmental responsibility performance; environmental disclosure (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 (1)

Downloads: (external link)
https://www.mdpi.com/2071-1050/14/20/13608/pdf (application/pdf)
https://www.mdpi.com/2071-1050/14/20/13608/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:14:y:2022:i:20:p:13608-:d:948782

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().