How does fiscal pressure affect corporate green transformation? A quasi-natural experiment based on education authority reform

Song Nie ()
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Song Nie: Nankai University

Empirical Economics, 2025, vol. 68, issue 5, No 11, 2357-2382

Abstract: Abstract Recently, as problems related to local government debt and land fiscal revenue have become increasingly serious, Chinese local governments have been facing severe fiscal pressures. The fiscal issue will change the government behavior and affect the regional performance. However, the research on whether fiscal pressure affects corporate green transformation is still scarce. To cover the research gap on the micro-impact of fiscal pressure, we consider the “Education Authority Reform” as a quasi-experiment and adopt the continuous DID method to examine the effect of fiscal pressure on corporate green transformation. We find that fiscal pressure generated by the education authority reform significantly exerts negative impacts on corporate green transformation. This negative effect acts through weakening green innovation, adding financing constraints, increasing tax burden, and loosening environmental regulation. The conclusions offer theoretical support for effective government fiscal governance and hold significant practical implications for promoting corporate green transformation in emerging market countries.

Keywords: Corporate green transformation; Local government fiscal pressure; Continuous DID method; Government behavior; Education authority reform (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s00181-024-02701-0

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