Environmental protection taxes and green productivity: Evidence from listed companies in China

Zhijun Yan, Yuting Jia and Bingbing Zhang

Economic Systems, 2024, vol. 48, issue 4

Abstract: Enforcing an environmental protection tax is a pivotal institutional measure for addressing environmental and climate change challenges and marking a substantial advancement in ecological development. This study aims to explore the influence of environmental protection taxes on the "green" productivity of the manufacturing industry through an analysis of Chinese listed companies. Initially, the Dynamic Slacks-Based Measure (DSBM) method is employed to estimate the "green" production efficiency levels of 175 listed companies in China from 2016 to 2020. Subsequently, by aligning pollution tax standards issued by local governments and relevant environmental protection departments with microlevel data from the CSMAR database, wind database, listed company annual reports, and social responsibility reports, the sample was refined to 833 data points. Using the implementation of the environmental protection tax policy in 2018 as a natural experiment, a Difference-in-Differences (DID) model is applied for empirical testing. The empirical results reveal a counterintuitive negative correlation between the environmental protection tax and the "green" productivity of companies, contradicting the predictions of the Porter hypothesis. This suggests that stringent environmental regulations hinder the development of green technologies. The adverse impact of environmental protection taxes on "green" productivity is attributed to heightened environmental legitimacy pressures and increasing environmental uncertainty risks companies face. Further exploratory analysis indicated that the digital economy and green finance have a positive moderating effect, significantly mitigating the negative impact of environmental protection taxes on companies' overall "green" productivity. Consequently, dynamically optimizing environmental tax policies is imperative to alleviate companies' environmental legitimacy pressures and uncertainty risks. Additionally, capitalizing on the opportunities the digital economy presents and leveraging green finance policies have emerged as effective strategies for realizing the Porter effect of environmental protection taxes.

Keywords: Environmental Protection Tax; Green Productivity; Environmental Uncertainty; Digital Economy; Green Finance (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0939362524000359
Full text for ScienceDirect subscribers only

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:eee:ecosys:v:48:y:2024:i:4:s0939362524000359

DOI: 10.1016/j.ecosys.2024.101213

Access Statistics for this article

Economic Systems is currently edited by R. Frensch

More articles in Economic Systems from Elsevier Contact information at EDIRC.
Bibliographic data for series maintained by Catherine Liu ().