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Governmental subsidies, corporate environmental investments and firm performance: Evidence based on oil & petroleum industry

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  • Xue, Dawei
  • Feng, Jiayin
  • zhu, Zhihong

Abstract

This paper examines the impact of different types of government subsidies on the financial performance of oil & petroleum corporations. We find that environment-friendly government subsidies enhance the investments in environmental protection of oil & petroleum corporations, comparing with non-environment-friendly subsidies. Furthermore, preventive investments in environmental protection significantly mediate the effect of corporate subsidies on financial performance, whereas government investments in environmental protection have a masking effect. Overall, we provide policy implications for government support to balance the development of firms and environmental protection.

Suggested Citation

  • Xue, Dawei & Feng, Jiayin & zhu, Zhihong, 2023. "Governmental subsidies, corporate environmental investments and firm performance: Evidence based on oil & petroleum industry," Finance Research Letters, Elsevier, vol. 56(C).
    • Handle: RePEc:eee:finlet:v:56:y:2023:i:c:s1544612323003914
    DOI: 10.1016/j.frl.2023.104019
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    References listed on IDEAS

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    1. Yongqiang Gao & Taïeb Hafsi, 2015. "Government Intervention, Peers’ Giving and Corporate Philanthropy: Evidence from Chinese Private SMEs," Journal of Business Ethics, Springer, vol. 132(2), pages 433-447, December.
    2. Tuomas Takalo & Tanja Tanayama, 2010. "Adverse selection and financing of innovation: is there a need for R&D subsidies?," The Journal of Technology Transfer, Springer, vol. 35(1), pages 16-41, February.
    3. Hye-Young Joo & Yong-Won Seo & Hokey Min, 2018. "Examining the effects of government intervention on the firm’s environmental and technological innovation capabilities and export performance," International Journal of Production Research, Taylor & Francis Journals, vol. 56(18), pages 6090-6111, September.
    4. Zahra, Shaker A. & Garvis, Dennis M., 2000. "International corporate entrepreneurship and firm performance: The moderating effect of international environmental hostility," Journal of Business Venturing, Elsevier, vol. 15(5-6), pages 469-492.
    5. Zhang, Qi & Yu, Zhi & Kong, Dongmin, 2019. "The real effect of legal institutions: Environmental courts and firm environmental protection expenditure," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
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    Cited by:

    1. Zhao, Lin & Chong, Kim Mee & Gooi, Leong-Mow & Yan, Luqing, 2024. "Research on the impact of government fiscal subsidies and tax incentive mechanism on the output of green patents in enterprises," Finance Research Letters, Elsevier, vol. 61(C).

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