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Corruption and firm efforts on environmental protection: Evidence from a policy shock

Cheng Yang, Wenzhe Zhang, Yan Sheng and Zhiqing Yang

Pacific-Basin Finance Journal, 2021, vol. 65, issue C

Abstract: This paper evaluates the causal effects of China's anti-corruption campaign on corporate environmental costs. Using primary data and the investigations of the anti-corruption campaign as a quasi-natural experiment, our difference-in-differences estimation shows that: (1) the inspections encourages heavy pollution enterprises to increase investment in environmental protection; (2) our findings are particularly pronounced in subsamples of SOEs, non-SOEs with political connections, firms with more related party transaction, with less government’ intervention, with more financing constrains and information asymmetry. Overall, this paper links the corruption and environmental protection, which is helpful for the governments to improve the environment circumstances through political channel.

Keywords: Corruption; Environmental protection; Corporate environmental investment; Quasi-natural experiment; China (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.pacfin.2020.101465

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