Regulatory inquiry letters and green M&As of heavily polluting firms

Xue Wang, Jinlong Qiu, Zhaoxue Qiu and Wenshuang Bao

Finance Research Letters, 2025, vol. 78, issue C

Abstract: Inquiry letters serve as a nonadministrative regulatory measure employed by Chinese stock exchanges to oversee listed firms. This study examines the impact of inquiry letters related to green and environmental protection issues on the green transformation of heavily polluting firms, focusing on mergers and acquisitions (M&As). The findings indicate that inquiry letters addressing green concerns encourage heavily polluting firms to pursue green M&As, primarily driven by the spotlight effect and the governance effect. Further analysis reveals that stronger government environmental regulations and increased public environmental awareness amplify this positive relationship. Moreover, green M&As prompted by regulatory inquiries represent a strategic shift toward green transformation. This study offers new insights into the economic consequences of inquiry letters.

Keywords: Inquiry letters; Heavily polluting firms; Green mergers and acquisitions; Sustainable growth (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:78:y:2025:i:c:s1544612325004465

DOI: 10.1016/j.frl.2025.107183

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