Environmental Regulation and Corporate Greening Governance: New Evidence Based on the Distance Between Enterprises and Environmental Protection Bureaus

Bin Wang, Xuejing Liu, Bo Li and Daqian Shi

SAGE Open, 2025, vol. 15, issue 3, 21582440251366012

Abstract: Ecological and environmental protection has become a crucial component and key indicator of high-quality economic development. Strengthening corporate greening governance is a key focus area for regulators aiming to enhance the reform of a modernized environmental governance system. This paper examines a sample of A-share listed companies in China from 2009 to 2021, focusing on the impact of geographical distance between enterprises and Environmental Protection Bureaus(EPBs) on corporate greenwashing, which is grounded in the frameworks of government-enterprise collusion and proactive government regulation. Empirical tests show that the closer an enterprise is to the Municipal Environmental Protection Bureau, the greater the degree of corporate greenwashing, which supports the dominant role of the “distance decay effect†of government-enterprise collusion. The conclusion remains robust after considering endogeneity issues. Mechanism tests show that the government-enterprise collusion effect is the main pathway through which environmental regulatory distance affects corporate greenwashing, and that the effect is most significant at the national, provincial, and district levels of political affiliation. We also find that this relationship varies across regions, industries, and types of enterprises. Specifically, it is more pronounced among enterprises located in non-eastern regions, those in non-provincial capitals and non-sub-provincial cities, enterprises with low industry concentration, and enterprises that are not yet mature. Meanwhile, media attention, shareholder monitoring, government environmental concerns, and network infrastructure construction have moderating effects on it. This paper enriches the influencing factors of corporate greenwashing from the perspectives of geo-economics and public economics. It offers new empirical evidence supporting “the distance decay effect†and provides decision-making guidance for the government in implementing environmental protection regulations. JEL Classification: Q52, Q56, Q58.

Keywords: environmental regulation; corporate greening governance; geographical distance; geographical economics; government-enterprise collusion (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:sae:sagope:v:15:y:2025:i:3:p:21582440251366012

DOI: 10.1177/21582440251366012

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