Environmental regulation, green investment and corporate green governance: Evidence from China's New Environmental Protection Law

Kailong Mei and Zihao Zhang

Finance Research Letters, 2025, vol. 76, issue C

Abstract: Effective environmental regulation and promotion of green governance and innovation transformation of enterprises helps reconcile high-quality economic development with ecological efficiency. Using a sample of Chinese firms’ data spanning 2010–2022 and the implementation of the new Environmental Protection Law (EPL), this study conducts a quasi-natural experiment and employs a difference-in-differences model to investigate the impact of environmental regulation on corporate green governance and its action mechanism. The results of the analysis show that the implementation of the new EPL significantly enhanced corporate green governance performance by promoting green investment behavior, specifically for large-scale enterprises. This study not only expands the research boundary of the impact of environmental regulation on enterprises but also provides theoretical support and empirical evidence for China to understand the synergy in the development of ecological protection and economic growth.

Keywords: Environmental regulation; Corporate green governance; Difference-in-differences; Green investment; Environmental protection law (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:76:y:2025:i:c:s1544612325002430

DOI: 10.1016/j.frl.2025.106979

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