Environmental regulation and de-zombified governance of heavy polluting enterprises: Quasi-natural experiment of the China's New Environmental Protection Law

Xiuying Chen, Haiming Lan, Sheng Liu and Jianbin Li

Energy & Environment, 2025, vol. 36, issue 4, 1973-2000

Abstract: Removing backward production capacity and clearing out zombie enterprises is crucial to realize the carbon peaking and carbon neutrality goals. However, as a command-control environmental regulation policy, whether the New Environmental Protection Law (NEPL) can guide heavy-polluting enterprises to achieve green transformation and get rid of the zombified risk remains unknown. Our article applies the difference-in-difference (DID) method to explore the impact of the stricter environmental regulation policies on the de-zombification of heavily polluting enterprises in the context of the implementation of NEPL in China. The results show that the implementation of NEPL significantly reduces the zombified risk of heavy-polluting enterprises. The results were valid by a series of robustness tests of propensity score matching, common trends test, placebos test, conducting double clustered standard errors to industry and province level, eliminating other policy interference, ruling out reverse causation, easing the potential endogeneity problems, and controlling enterprise's internal management level. Furthermore, there is a time lag in NEPL policy, which requires a long-term mechanism. Moreover, the NEPL can promote enterprise de-zombie governance through the mechanism of market competition and market allocation. The effects of the NEPL are heterogeneous due to the nature of enterprise property rights, enterprise scale, industry radiation capacity, regional development level, and internal management capacity. This article provides policy implications for developing countries to promote de-zombified governance of their economic systems and defuse risks of green transition.

Keywords: environmental regulation; New Environmental Protection Law; zombie enterprises; de-zombified; difference-in-difference method; quasi-natural experiment (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0958305X231205514 (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:sae:engenv:v:36:y:2025:i:4:p:1973-2000

DOI: 10.1177/0958305X231205514

Access Statistics for this article

More articles in Energy & Environment
Bibliographic data for series maintained by SAGE Publications ().