Environmental protection subsidies, green technology innovation and environmental performance: Evidence from China’s heavy-polluting listed firms

Abstract

The heavy-polluting industry is inexorably to responsible for the deterioration of the environment. Improving environmental performance is an unavoidable decision for heavy-polluting firms to ensure sustainable development under the policy framework of the carbon peak target. This study provides theoretical and empirical evidence for the effect of environmental protection subsidies on environmental performance. This study constructs basic and mediating effect models to measure how environmental protection subsidies affect environmental performance using panel data of China’s heavy-polluting listed firms from 2008 to 2019. This is an important outcome of industrial green transformation in environmental governance and provides a scientific basis for government departments to formulate environmental policies. The results of the empirical analysis show that environmental protection subsidies can improve the environmental performance of heavy-polluting listed firms. After receiving environmental protection subsidies, firms engaged in clean and green production through green technology innovation, thereby reducing external environmental pollution and improving their environmental performance. The mediating role of green technology innovation in the relationship between environmental protection subsidies and environmental performance is significant only in state-owned firms and firms in Eastern China. The research results may further guide the direction of green development of heavy-polluting industries, and thus promote harmonious development between the environment and the economy.

Multiple shareholding institutional investors and green governance of heavy‐polluting industries

“…For example, Zhang, Pan, and Lv (2022) find that MSII can transmit M&A experience and industry information to improve M&A performance. Du et al (2023) argue that MSII can realize the contagion effect of digital transformation among supply chain firms through information transmission. Brooks et al (2018) show that MSII increases the probability of M&A between shareholding companies and can reduce transaction costs.…”

“…Tang et al (2023) show that MSII may restrain controlling shareholders from tunneling. Second, based on the social network function of chain shareholding, MSIIs can transfer information and experience among firms and help to break down barriers to information and technology transfer (Brooks et al, 2018; Du et al, 2023; Zhang, Pan, & Lv, 2022). For example, Zhang, Pan, and Lv (2022) find that MSII can transmit M&A experience and industry information to improve M&A performance.…”

“…Exploring the multifaceted roles of MSII in the green governance of heavily polluting industries is vital, particularly when addressing the trifecta of challenges these industries face: inadequate environmental investment resources, governance motivation deficits, and technological and innovation obstacles (Du et al, 2023; Guo et al, 2023; Zhang, Li, et al, 2022). The influence of MSII on these areas is crucial to determining its potential for environmental impact.…”

“…Positively, from the diminishing marginal cost of governance viewpoint, MSII can supervise and incentivize management, curtailing the tunneling activities of major shareholders and resolving the issues of resource scarcity and motivational inadequacies in green governance, thereby enhancing environmental outcomes (Tang et al, 2023; Zhang, Li, et al, 2022). Additionally, leveraging its social network, MSII may facilitate the dissemination of innovative knowledge, helping to overcome the technical barriers in green governance (Du et al, 2023).…”

“…Existing literature points out at least three challenges in the green governance of enterprises in heavy‐polluting industries, including lack of resources for environmental investment, insufficient motivation for governance, and the existence of technology and innovation barriers (Du et al, 2023; Guo et al, 2023; Zhang, Li, et al, 2022). Specifically, we argue that MSII may achieve the green transformation of heavy‐polluting industries in the following ways (Kang et al, 2018; Li, Liu, & Taylor, 2023; Ramalingegowda et al, 2021).…”