Environmental regulation affects the financial performance of firms, while the findings are mixed. This paper quantitatively analyzes the current and lagged effect of environmental regulation (ER) on financial performance (FP), based on the data of 361 highly polluting A-shares firms and 936 mildly polluting A-shares firms in China. It is proved that ER exerts a negative effect on the FP of polluting firms in the short term and a positive effect in the long term, which unifies the ‘Porter Hypothesis’ (PH) and the ‘Costly Regulation Hypothesis’ (CRH) on the temporal dimension. Mechanism analysis reveals that ER negatively affects current FP of highly polluting firms by improving their green innovation investment. In addition, ER has a significant positive lagged effect on the FP of polluting firms by improving their operating efficiency, rather than reducing production costs. Furthermore, we find that ER significantly improves the FP of highly polluting firms, especially state-owned firms, as opposed to mildly polluting firms and privately-owned firms. The conclusions imply that government should make subsidies for green firms or firms going green, and firms should pay more attention to green innovation investment and green development.

Digital transformation is increasingly crucial to the upgrading and sustainable development of China’s manufacturing industry with the rapid development of the digital economy. To study the impact of the digital economy on the sustainable development of the manufacturing industry, this study analyzed the theoretical basis of the digital economy’s impact on the promotion of the sustainable development of the manufacturing industry. Then, based on the panel data of manufacturing sectors in 2002, 2005, 2007, 2010, 2012, 2015, and 2017, empirical tests and mechanism analysis were conducted by means of the two-way fixed effect model and the mediating effect model. The results were as follows: (1) Digital services can significantly improve the industrial performance of the manufacturing industry, while the effect of digital products is nonsignificant; (2) Mechanism analysis revealed that digital services can promote the industrial performance of the manufacturing industry through the intermediary mechanisms of reducing production costs rather than transaction costs; (3) Digital services can also reduce carbon emissions and promote the green development of the manufacturing industry through the intermediary mechanisms of innovation. In conclusion, digital services can promote the sustainable development of China’s manufacturing industry. This paper provides evidence for the integration of the manufacturing industry and the digital economy. Furthermore, it has important implications for the formulation of digital economy policies and the sustainable development of the manufacturing industry.

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