Environmental regulation and firms' trans-regional investment: Evidence from the implementation of the New Environmental Protection Law

Xianhe Qu and Jie Xia

Finance Research Letters, 2024, vol. 67, issue PA

Abstract: Most literary works delve into the environmental consequences of the New Environmental Protection Law, widely regarded as the most stringent ecological protection legislation ever enacted. This study examines the relationship between implementing the New Environmental Protection Law and the cross-regional investment activities of firms. This study utilizes a difference-in-differences methodology to investigate the economic effects and underlying mechanisms from 2011 to 2022. The findings indicate that implementing the New Environmental Protection Law can reduce cross-regional investment by firms, with the cost of compliance playing a crucial role. The findings enhance the current research paradigm about the behavior of small businesses.

Keywords: Environmental regulation; Trans-regional investment; New Environmental Protection Law (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:67:y:2024:i:pa:s1544612324008225

DOI: 10.1016/j.frl.2024.105792

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