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How does energy policy affect firms' outward foreign direct investment: An explanation based on investment motivation and firms' performance

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  • Zhang, Dongyang
  • Kong, Qunxi

Abstract

Energy policy can improve the efficiency of firms' outward foreign direct investment (OFDI) and promote the quality of China's economic growth, which is an important issue requiring urgent attention from Chinese society. Using the data of A-share listed companies from 2007 to 2018, this paper examines the impacts and mechanisms of both new and traditional energy policies on firms' OFDI. First, this study found a significant positive promotion effect from energy policy on firms' OFDI. Second, the heterogeneity test results suggest that an increase in the level of urban openness may weaken the positive effect of new energy policies on firms' OFDI, but may enhance the promotion effect of traditional energy policies. State ownership is conducive to enhancing firms' OFDI under new energy policies. However, such ownership can weaken the willingness of firms to invest abroad under traditional energy policies. Third, the mechanism analysis shows that new energy policy promotes firms to invest in technologically developed host countries, thus expanding the scale of firms' OFDI in the next round. Energy policies can improve firms' business and environmental performances in the short run; in the long run, this effect diminishes year by year.

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  • Zhang, Dongyang & Kong, Qunxi, 2021. "How does energy policy affect firms' outward foreign direct investment: An explanation based on investment motivation and firms' performance," Energy Policy, Elsevier, vol. 158(C).
    • Handle: RePEc:eee:enepol:v:158:y:2021:i:c:s0301421521004183
    DOI: 10.1016/j.enpol.2021.112548
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    Cited by:

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    2. Yifan Wang & Zhongfu Yu & Yamin Hou, 2022. "The Effects of Environmental Regulation and Low-Carbon Logistics Capacity on the Level of New Urbanization in Six Central Provinces of China," Sustainability, MDPI, vol. 14(19), pages 1-20, October.
    3. Zhang, Dongyang & Kong, Qunxi, 2022. "Green energy transition and sustainable development of energy firms: An assessment of renewable energy policy," Energy Economics, Elsevier, vol. 111(C).
    4. Zhang, Dongyang & Kong, Qunxi, 2022. "Renewable energy policy, green investment, and sustainability of energy firms," Renewable Energy, Elsevier, vol. 192(C), pages 118-133.
    5. Decai Tang & Zhangming Shan & Junxia He & Ziqian Zhao, 2022. "How Do Environmental Regulations and Outward Foreign Direct Investment Impact the Green Total Factor Productivity in China? A Mediating Effect Test Based on Provincial Panel Data," IJERPH, MDPI, vol. 19(23), pages 1-32, November.
    6. Kong, Qunxi & Wu, Peipei & Wang, Ziqi, 2024. "Outward foreign direct investment operation modes and reverse technology spillovers: Implications for the quality of economic growth," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 1628-1639.
    7. Zhang, Dongyang, 2022. "Environmental regulation and firm product quality improvement: How does the greenwashing response?," International Review of Financial Analysis, Elsevier, vol. 80(C).
    8. Zhang, Dongyang, 2022. "Green financial system regulation shock and greenwashing behaviors: Evidence from Chinese firms," Energy Economics, Elsevier, vol. 111(C).
    9. Zhang, Dongyang, 2023. "Does green finance really inhibit extreme hypocritical ESG risk? A greenwashing perspective exploration," Energy Economics, Elsevier, vol. 121(C).
    10. Hujun He & Yichen Zhao & Hongxu Tian & Wei Li, 2022. "Risk Evaluation of Overseas Mining Investment Based on a Support Vector Machine," Sustainability, MDPI, vol. 15(1), pages 1-14, December.
    11. Zhang, Dongyang & Lucey, Brian M., 2022. "Sustainable behaviors and firm performance: The role of financial constraints’ alleviation," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 220-233.
    12. Udichibarna Bose, 2023. "Does green transition promote green innovation and technological acquisitions?," Working Papers w202305, Banco de Portugal, Economics and Research Department.
    13. Zijie Yang & Dong Huang & Yuqing Zhao & Wenqian Wang, 2022. "A Bibliometric Review of Energy Related International Investment Based on an Evolutionary Perspective," Energies, MDPI, vol. 15(9), pages 1-21, May.
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    16. Zhang, Dongyang, 2023. "Subsidy expiration and greenwashing decision: Is there a role of bankruptcy risk?," Energy Economics, Elsevier, vol. 118(C).

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