Impact of Environmental Taxation on Financial Performance of Energy-Intensive Firms: The Role of Digital Transformation

Yao-Bin Liu, Wei-Feng Deng, Kang Luo and Ming-Yuan Tang

Emerging Markets Finance and Trade, 2024, vol. 60, issue 3, 598-616

Abstract: In the new wave of the scientific and technological revolution, clean production and digital transformation are the primary directions of development for energy-intensive industries. In this study, we examined the impact of the 2016 Chinese Environmental Protection Tax Law (EPTL2016) on energy-intensive firms’ financial performance and explored the role of digital transformation using panel data from Chinese A-share-listed companies. Using the difference-in-differences method, we found that the EPTL2016 has significantly improved energy-intensive firms’ financial performance by incentivizing their digital transformation but has at the same time moderated the economic benefits of digital transformation. Moreover, state-owned enterprises have been more effective at improving their financial performance through digital transformation under the pressure of the EPTL2016. From a regional perspective, the EPTL2016 has enhanced energy-intensive firms’ financial performance primarily through digital transformation in regions with better digital infrastructure, and through green transformation in regions highly dependent on resource and in regions with stricter environmental governance.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:60:y:2024:i:3:p:598-616

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DOI: 10.1080/1540496X.2023.2228462

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