Do state subsidies increase corporate environmental spending?

Wang, Yang; Zhang, Yifei

doi:10.1016/j.irfa.2020.101592

Cited by 57 publications

(39 citation statements)

References 73 publications

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“…In China, government subsidies are an important policy instrument for the government to direct financial resources to industries and enterprises that it supports. While some studies show that government subsidies promote enterprises to improve environmental quality (Li et al, 2018) or to increase corporate environmental spending to gain government support (Wang & Zhang, 2020), in the context of Green Credit Policy, we predict the opposite. Since the Green Credit Policy works by imposing financing constraints, we expect that the policy will have the most effect on firms that the credit constraint from banks would pose a material challenge to firms' continuous operations.…”

Section: Theory and Hypothesiscontrasting

confidence: 63%

Death or rebirth? How small‐ and medium‐sized enterprises respond to responsible investment

et al. 2022

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This study examines how nonlisted small-and medium-sized enterprises (SMEs) respond to the financial constraints imposed by responsible investment policies. We examined how SMEs' operational and environmental behaviors changed following China's Green Credit Policy, combining a synthetic control method with a triple difference-in-differences approach. We found that SMEs were likely to exit the market following the Green Credit Policy; however, the surviving SMEs significantly decreased their pollution. We also discovered that foreign firms and firms that received government subsidies were less susceptible to the policy and that the internal cash flow reserves of larger firms hardly changed, while that of SMEs significantly decreased after the policy. This indicates that for some SMEs with relatively poor environmental performance, there is not so much a lack of sufficient financing but rather the absence of strong incentives to change. Thus, financing constraints can stimulate a strong incentive to improve firms' environmental performance.

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Section: Theory and Hypothesiscontrasting

confidence: 63%

Death or rebirth? How small‐ and medium‐sized enterprises respond to responsible investment

et al. 2022

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“…The "absence of actual controller" of SOEs and the "inherent compensation" of executives highlight the opportunistic motivation of management, which easily leads to the inflow of resources into the fields that bring private benefits to management, rather than into the fields that create enterprise value and social benefits [42]. Wang and Zhang [43] pointed out that compared with NSOEs, SOEs are less likely to lose government support and make few efforts to solve the corporate pollution problem. The lack of information of state-owned controlling shareholders leads to the misuse of environmental protection subsidy domination and inability to exert the function of environmental protection funds in SOEs' green technology breakthroughs.…”

Section: The Mechanism Of Environmental Protection Subsidiesmentioning

confidence: 99%

Can Mixed-Ownership Reform Drive the Green Transformation of SOEs?

Yuan

et al. 2021

Energies

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In the construction of ecological civilization, green innovation has become an important driving force for the sustainable development of state-owned enterprises (SOEs). This paper uses panel data of state-owned listed enterprises from 2008 to 2019 to explore mixed-ownership reform’s influence on the green transformation of SOEs and its specific mechanisms. The results show that the diversity of mixed shareholders, the depth of mixed equity, and the restriction of mixed equity significantly promote the SOEs’ green innovation. Moreover, there are distinctions in the impact of the shareholding ratio of heterogeneous shareholders on green innovation. Only the increase in the shareholding ratio of foreign shareholders has a positive correlation with green innovation. The mechanism tests indicate that the mixed-ownership reform plays a governance role in the green transformation of SOEs by optimizing the reasonable allocation of environmental protection subsidies and propelling environmental social responsibility’s active performance. Our study further subdivides the significant promotion effect of mixed-ownership reform on green innovation, finding that it only exists in the SOEs in heavily polluting industries and regions with a high degree of marketization. Finally, we find that the ownership structure adjustment caused by the mixed-ownership reform has improved SOEs’ environmental management system and facilitated its sustainable development capabilities.

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“…Moreover, due to inherent connections with the government, SOEs' operational objectives include maximizing shareholder interests and assuming policy burdens, such as maintaining social stability, improving the employment rate and protecting the environment (Wang et al, 2019). As a result, SOEs may invest in green innovations to cater to the regulators' call on sustainability, build an environmentally responsible image and act as role models for their counterparts (Wang & Zhang, 2020). In addition, as the board of SOEs is appointed by state officials, they have strong incentives to overinvest in environmentally innovative activities to serve state interests and reduce the possibility of future CEOs turnover (Wang et al, 2019).…”

Section: Hypothesis Developmentmentioning

confidence: 99%

Do major customers encourage innovative sustainable development? Empirical evidence from corporate green innovation in China

et al. 2022

Self Cite

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This paper examines the impact of customer concentration on green innovation in Chinese listed firms between 2006 and 2018 through the dynamic panel generalized method of moments regressions. It is reported that major customers positively impact corporate green innovation, indicating that firms have more incentives to engage in innovative green practices to maintain stable relationships with major customers. In addition, the positive relationship between customer concentration and green innovation is more pronounced in state-owned enterprises, firms located in the provinces with a high level of marketization, and after China's new Environmental Protection Law implementation. Moreover, we observe that the positive impact of customer concentration on corporate green innovation is more significant among industrial firms and firms operating in heavily polluting industries. Furthermore, industrial competition is an essential channel for major customers to affect corporate green innovation.

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Do state subsidies increase corporate environmental spending?

Cited by 57 publications

References 73 publications

Death or rebirth? How small‐ and medium‐sized enterprises respond to responsible investment

Death or rebirth? How small‐ and medium‐sized enterprises respond to responsible investment

Can Mixed-Ownership Reform Drive the Green Transformation of SOEs?

Do major customers encourage innovative sustainable development? Empirical evidence from corporate green innovation in China

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