Does environmental inspection led by central government undermine Chinese heavy-polluting firms’ stock value? The buffer role of political connection

Tian, Meng; Xu, Guangdong; Zhang, Linzi

doi:10.1016/j.jclepro.2019.117695

Cited by 82 publications

(38 citation statements)

References 77 publications

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“…As a non‐routine inspection mechanism, CEPI has received more attention than other dispatch agencies. But extant literature mainly focuses on CEPI’s theoretical basis, or on its analysis of system improvements or mechanisms (Tian et al., 2019; Wang et al., 2019). Regarding the implementation results of CEPI, some studies have shown that CEPI can improve local environmental performance (Jia & Chen, 2019; Li et al., 2020), enhance local environmental enforcement (Zhang et al., 2018) and undermine heavy‐polluting firms’ stock value (Tian et al., 2019; Zeng et al., 2021).…”

Section: Introductionmentioning

confidence: 99%

“…But extant literature mainly focuses on CEPI's theoretical basis, or on its analysis of system improvements or mechanisms (Tian et al, 2019;Wang et al, 2019). Regarding the implementation results of CEPI, some studies have shown that CEPI can improve local environmental performance (Jia & Chen, 2019;Li et al, 2020), enhance local environmental enforcement and undermine heavy-polluting firms' stock value (Tian et al, 2019;Zeng et al, 2021). However, whether CEPI has the same effect on firms' environmental disclosure is not clear.…”

Section: Introductionmentioning

confidence: 99%

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Does central environmental protection inspection enhance firms’ environmental disclosure? Evidence from China

Pan

Yao

2021

Growth and Change

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An increasing number of emerging countries have begun implementing central environmental protection inspection (CEPI) to make up for the lack of environmental decentralization. Extant literature has shown that CEPI improves local environmental enforcement and performance. However, it is unclear whether CEPI, which is regarded as a non‐routine environmental enforcement and independent of the system of environmental decentralization, has an increasing effect on firms’ environmental disclosure. This paper selects the listed firms located in Hebei Province, the pilot province inspected by the CEPI, as the treatment group and uses the listed firms of the third and fourth rounds of inspected provinces as the control group. The difference‐in‐difference results show that the environmental information level and quality of listed firms in Hebei Province is improved compared with those of firms in other provinces, and the increasing effect is more significant in state‐owned firms, in developed regions and in regions where local officials have more promotion incentives. The results of this study suggest that the central government should establish a regular environmental inspection mechanism and coordinate it with the system of environmental decentralization in emerging countries.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Does central environmental protection inspection enhance firms’ environmental disclosure? Evidence from China

Pan

Yao

2021

Growth and Change

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show abstract

“…Previous studies chose estimation windows ranging from 90 to 200 days [ 57 ]. To ensure our estimation window is efficient enough to calculate meaningful estimates of normal returns and avoid influences from other events [ 58 ], we set 150 trading days before the event window ([T 0 -160, T 0 -10]) as our estimation window.…”

Section: Methodsmentioning

confidence: 99%

Does Environmental Policy Help Green Industry? Evidence from China’s Promotion of Municipal Solid Waste Sorting

Chen

Wang

Wen

et al. 2021

IJERPH

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As municipal solid waste severely threatens human health and the ecological environment, since 2019, China has started to fully practice MSW sorting in all prefecture-level cities. In this paper, we apply the event study and difference-in-difference methods to investigate how China’s green policy of promoting MSW sorting influences listed waste sorting companies from the perspective of investors’ short-term and long-term reactions. This paper finds that investors are not sensitive to the introduction of MSW sorting in the short term, the new environmental policy does not relieve the financing constraints of related enterprises in the long run, and the financing constraints of private enterprises are stricter than those of state-owned enterprises. These findings indicate that China’s current encouragement of garbage sorting is not efficient enough as it has not brought benefits to the waste classification industry yet. More measures need to be taken to eliminate uncertainties in urban waste sorting. Our paper enriches the research on China’s waste sorting practices and provides new evidence of the effects of environmental policy on related firms from the perspective of green industry.

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“…One major critical challenge in environmental management in China, as well as many 122 other developing countries, is the deficit in policy implementation (Duflo et al, 2018;123 Li et al, 2019;Shimshack, 2014). In the Chinese "top-down" environmental regulation structure, the effectiveness of environmental regulations depends mainly on the implementation efforts of local governments (Tian et al, 2019;Sun et al, 2021). However, there is a conflict of interest between the central government-the policymaker, and the local governments-the policy implementers, in environmental governance targets (Liu et al, 2016), which leads to a growing phenomenon of weak implementation and lax regulation by local governments in environmental management (Ran, 2013;Yu and Wang, 2013).…”

Section: Cepi In China 121mentioning

confidence: 99%

Benefits and Costs of Campaign-Style Environmental Implementation: Evidence from China’s Central Environmental Protection Inspection System

Pan

Hong

2021

Preprint

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Campaign-style environmental implementation (CEI) is widely exerted in environmental protection, while its benefits and costs are controversial. We take advantage of the Central Environmental Protection Inspection (CEPI) System— a latest and distinguished form of CEI launched by China in 2016, as a quasi-natural experiment to compare the benefits and costs of CEI based on water pollution effects estimates. Our results based on the annual panel data from 500 cities during 2009-2018 show that CEPI significantly reduced water pollution by an average of 11.2%. Further cost-benefit analysis based on the estimates of water pollution reduction shows that the potential health benefits of mortality and morbidity reduction resulting from CEPI are at least $279.5 billion, which is greater than the $192.2 billion economic losses it causes. The gap is further magnified after considering the potential biases. We also explore why CEPI is cost-effective and find that CEPI reduces water pollution and becomes cost-effective mainly through deterring local officials, punishing polluting enterprises, and increasing public participation in environmental governance.

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Does environmental inspection led by central government undermine Chinese heavy-polluting firms’ stock value? The buffer role of political connection

Cited by 82 publications

References 77 publications

Does central environmental protection inspection enhance firms’ environmental disclosure? Evidence from China

Does central environmental protection inspection enhance firms’ environmental disclosure? Evidence from China

Does Environmental Policy Help Green Industry? Evidence from China’s Promotion of Municipal Solid Waste Sorting

Benefits and Costs of Campaign-Style Environmental Implementation: Evidence from China’s Central Environmental Protection Inspection System

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