The Effect of Local Government Environmental Concern on Corporate Environmental Investment: Evidence from China

Dan Yu, Kewei Hu () and Yugui Hao
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Dan Yu: College of Continuing Education, Zhejiang Agriculture and Forestry University, Hangzhou 311300, China
Kewei Hu: College of Economics and Management, Zhejiang Agriculture and Forestry University, Hangzhou 311300, China
Yugui Hao: College of Economics and Management, Zhejiang Agriculture and Forestry University, Hangzhou 311300, China

Sustainability, 2023, vol. 15, issue 15, 1-20

Abstract: This paper uses machine learning tools to construct local government environmental concern indicators and empirically examines the impact of local government environmental concern on corporate environmental investment. From the resource endowment perspective, corporate resources’ moderating role is also verified. The major findings are as follows: (1) local government environmental concern has a significant positive effect on the environmental investment of corporations in their jurisdictions; (2) corporations with fewer financial and political resources will pay more attention to the local government’s intention when making environmental investment decisions, and the promotion effect of local government environmental concern on the environmental investment of such corporations is more prominent. Further analysis shows that this promotion effect is more significant in regions with a high intensity of environmental regulation and high levels of economic development, and is more effective for key regulated corporations. This paper verifies the effect of local government on micro-corporations in environmental governance from the perspective of environmental concern, broadens the boundary of research on the relationship between government and corporate environmental responsibility fulfillment, and enriches the study of factors influencing corporate environmental investment behavior. It also provides important empirical evidence for central and local governments to implement green development and build a government–business collaborative environmental governance system.

Keywords: government environmental concern; corporate environmental investment; environmental governance; corporate resources; machine learning (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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