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Environmental governance and firm's environmental investment: Evidence from the natural resources and assets accountability audit of outgoing officials

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  • PENG, Langchuan
  • LI, Hao

Abstract

This paper examines how the natural resources and assets accountability audit conducted on outgoing officials affects environmental investments of Chinese listed firms. Using a longitudinal dataset and employing a staggered difference-in-differences (DD) estimation method, our findings reveal a notable increase in firms’ environmental investment due to the policy. The impact is noticeable solely within large-scale corporations and state-owned enterprises. Moreover, we further investigate the underlying mechanism and discover that the observed effects are driven by a reduction in the tax burden.

Suggested Citation

  • PENG, Langchuan & LI, Hao, 2024. "Environmental governance and firm's environmental investment: Evidence from the natural resources and assets accountability audit of outgoing officials," Finance Research Letters, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:finlet:v:65:y:2024:i:c:s1544612324005750
    DOI: 10.1016/j.frl.2024.105545
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    References listed on IDEAS

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    1. Yan, Kai & Chen, Zhiwu & Wang, Jingang & Wang, Peipei & Liang, Weiming, 2023. "The power from folk monitoring: Leading Officials’ Natural Resources Accountability Audit (NRAA) and corporate ESG performance," Finance Research Letters, Elsevier, vol. 58(PC).
    2. Yongzheng Liu & Jie Mao, 2019. "How Do Tax Incentives Affect Investment and Productivity? Firm-Level Evidence from China," American Economic Journal: Economic Policy, American Economic Association, vol. 11(3), pages 261-291, August.
    3. Li, Hongbin & Zhou, Li-An, 2005. "Political turnover and economic performance: the incentive role of personnel control in China," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1743-1762, September.
    4. Lin, Xiaowei & Chen, Sicen & Cheng, Xin & Wang, Jinmei, 2022. "Local government audit and municipal debt risk: Evidence from audit reform in China," Finance Research Letters, Elsevier, vol. 50(C).
    5. Cailou Jiang & Rong Liu & Jie Han, 2023. "Does accountability audit of natural resource promote corporate environmental performance? An external supervision perspective," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(9), pages 9417-9438, September.
    6. Lei Zhu & Yuyu Liu & Chun Cai, 2023. "Natural resources and assets accountability audit of local officials and government subsidies: evidence from China," Applied Economics Letters, Taylor & Francis Journals, vol. 30(7), pages 981-985, April.
    7. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
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