Environmental Tax Incentives and Corporate Environmental Behaviour: An Unintended Consequence from a Natural Experiment in China

Sabri Boubaker, F. Cheng, J. Liao and S. Yue

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Abstract: Using the implementation of the Environmental Protection Tax (EPT) Law in China as a natural experiment, we explore the impact of environmental tax incentives on corporate environmental engagement. Evidence shows that, after the implementation of the EPT Law, there exists a significant improvement in the environmental performance of firms located in regions with increased EPT rates. However, our results reveal an unintended consequence that this effect is more salient for nonheavy-polluting companies rather than for heavy polluters that are more targeted by the EPT Law. \textcopyright 2023 John Wiley & Sons Ltd.

Keywords: China; corporate environmental performance; environmental tax incentives; heavy polluters (search for similar items in EconPapers)
Date: 2023
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Published in European Financial Management, 2023, ⟨10.1111/eufm.12445⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04434024

DOI: 10.1111/eufm.12445

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