Do private firms invest more in environmental protection under political control? Evidence from China

Abstract

For the first time, this study investigates the environmental performance outcomes of integrating local political committees into private firms. Using a nationwide survey of Chinese private firms, we find that the involvement of local party committees significantly bolsters corporate environmental investment. This finding remains consistent across various samples, alternative measures of the dependent variable, and different estimation methodologies. Notably, the influence of local party committees on pro-environmental practices is more pronounced in firms with lower family ownership, in regions with weaker environmental regulations, and where the owner is also the Party secretary. This study reveals local party committees as key mediators between government and firms, enhancing corporate engagement in environmental initiatives. It advocates for policies promoting collaboration between government and private firms, particularly emphasizing the strategic placement of party committees in firms with specific ownership and leadership characteristics to maximize environmental investment.