Regional environmental supervision and corporate environmental investment: from the perspective of ecological damage compensation

Abstract

Based on the "Pilot Reform of the Compensation System for Ecological and Environmental Damage" launched in 2015 and a research sample of listed companies in China's heavy pollution industry from 2014 to 2017, this paper uses a difference-in-differences model to empirically test the impact of the compensation system on corporate environmental investment, as well as the moderating effect of market degree and rm ownership. The result shows that the implementation of the compensation system has signi cantly promoted corporate environmental investment, and the market degree has a moderating effect, but the supervision effect remains the same due to rm ownership. Local government's strict environmental supervision on local enterprises is the important channel to ensure the function of ecological damage compensation system. This research provides a reference for the national government to formulate speci c and effective environmental policies, stimulate the environmental governance motivation of local governments, and encourage enterprises to assume environmental responsibilities, to achieve green and sustainable development. HighlightsEcological compensation system can improve the intensity of regional environmental supervision.The implementation of the compensation system can effectively promote corporate environmental investment.The increase of corporate environmental investment in high-marketization areas is signi cantly higher than that in low-marketization areas.The increase of state-owned enterprises' environmental investment is not signi cantly higher than that of non-state-owned enterprises

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