IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v65y2024ics1544612324006226.html
   My bibliography  Save this article

Environmental protection tax, green innovation, and environmental, social, and governance performance

Author

Listed:
  • Wang, Jia
  • Zhang, Shuying

Abstract

This study investigates the impact of China's Environmental Protection Tax Law, implemented as a quasi-natural experiment, on the environmental, social, and governance (ESG) performance of listed industrial enterprises from 2012 to 2022. The objective is to gain a better understanding of how this tax influences corporate behavior toward sustainability, addressing a gap in the literature regarding the effect on nonfinancial performance indicators. By employing a dataset of 9077 observations from the Wind and CSMAR databases, we determine whether the tax leads to improved ESG outcomes and fosters green innovation within these enterprises. The findings reveal that the tax significantly enhances the ESG performance of firms, particularly in environmental aspects, by encouraging green innovations. Moreover, the tax's impact is more pronounced in nonstate-owned enterprises than in state-owned ones. These results suggest that similar fiscal policies can effectively drive corporate sustainability; hence, policymakers should leverage economic tools for environmental management.

Suggested Citation

  • Wang, Jia & Zhang, Shuying, 2024. "Environmental protection tax, green innovation, and environmental, social, and governance performance," Finance Research Letters, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:finlet:v:65:y:2024:i:c:s1544612324006226
    DOI: 10.1016/j.frl.2024.105592
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612324006226
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2024.105592?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Liu, Ailan & Dai, Sijia & Wang, Zhixuan, 2023. "Environmental protection tax on enterprise environmental, social and governance performance: A multi-perspective analysis based on financing constraints," Journal of Asian Economics, Elsevier, vol. 89(C).
    2. Wang, Juxian & Ma, Mengdi & Dong, Tianyi & Zhang, Zheyuan, 2023. "Do ESG ratings promote corporate green innovation? A quasi-natural experiment based on SynTao Green Finance's ESG ratings," International Review of Financial Analysis, Elsevier, vol. 87(C).
    3. He, Yu & Zhao, Xiaoling & Zheng, Huan, 2023. "How does the environmental protection tax law affect firm ESG? Evidence from the Chinese stock markets," Energy Economics, Elsevier, vol. 127(PA).
    4. Wang, Zhen & Chu, Erming & Hao, Yukai, 2024. "Towards sustainable development: How does ESG performance promotes corporate green transformation," International Review of Financial Analysis, Elsevier, vol. 91(C).
    5. Hu, Shuo & Wang, Ailun & Du, Kerui, 2023. "Environmental tax reform and greenwashing: Evidence from Chinese listed companies," Energy Economics, Elsevier, vol. 124(C).
    6. Kong, Dongmin & Liu, Chenhao, 2024. "Centralization and regulatory enforcement: Evidence from personnel authority reform in China," Journal of Public Economics, Elsevier, vol. 229(C).
    7. Umar, Muhammad & Safi, Adnan, 2023. "Do green finance and innovation matter for environmental protection? A case of OECD economies," Energy Economics, Elsevier, vol. 119(C).
    8. Cheng, Xuanmei & Chen, Kanxiang & Su, Yuxin, 2023. "Green innovation in oil and gas exploration and production for meeting the sustainability goals," Resources Policy, Elsevier, vol. 87(PA).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dai, Xiajing & Zhang, Junjie, 2024. "China's green development journey through resource rent optimization and green finance policies," Resources Policy, Elsevier, vol. 90(C).
    2. Zhang, Kai & Wan, Shan & Zhou, Yuehui, 2024. "Executive compensation, internal governance and ESG performance," Finance Research Letters, Elsevier, vol. 66(C).
    3. Wang, Muyun & Zhang, Ying, 2024. "Controlling shareholders' equity pledge, litigation risk and corporate ESG performance," International Review of Economics & Finance, Elsevier, vol. 95(C).
    4. Shi, Ruoying & Zhou, Hengyi & Li, Xiangqian & Miao, Xue'er & Zhao, Xing, 2024. "Green finance, investor preferences, and corporate green innovation," Finance Research Letters, Elsevier, vol. 66(C).
    5. Wang, Sanchuan & Shu, Wanwu & Cui, Lianbiao, 2024. "Green finance policy and green economic transformation," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    6. Xue, Qinyuan & Jin, Yifei & Zhang, Cheng, 2024. "ESG rating results and corporate total factor productivity," International Review of Financial Analysis, Elsevier, vol. 95(PA).
    7. Li, Yujie & Hua, Ziyan, 2024. "Environmental protection tax law and corporate ESG performance," Finance Research Letters, Elsevier, vol. 64(C).
    8. Shi, Dinghao & Li, Zhiqiang & Huang, Yan & Tan, Haoyu & Ling, Yixin & Liu, Yunuo & Tu, Yongqian, 2024. "Market competition and ESG performance-based on the mediating role of board independence," International Review of Financial Analysis, Elsevier, vol. 96(PA).
    9. Liu, Changyu & Gong, Wanrong & Dong, Guanglong & Ji, Qiang, 2024. "Regulation of environmental, social and governance disclosure greenwashing behaviors considering the risk preference of enterprises," Energy Economics, Elsevier, vol. 135(C).
    10. Gui, Zhou & Lu, Xiaoyu, 2024. "Strengthening of rule of law and ESG performance of corporations," Finance Research Letters, Elsevier, vol. 66(C).
    11. Han, Wei & Wu, Di, 2024. "ESG ratings, business credit acquisition, and corporate value," International Review of Financial Analysis, Elsevier, vol. 95(PA).
    12. Siqian Chen & Xin Leng & Kun Luo, 2024. "Supply chain digitalization and corporate ESG performance," American Journal of Economics and Sociology, Wiley Blackwell, vol. 83(4), pages 855-881, September.
    13. Bai, Chengyu & Liu, Dan & Liu, Yong, 2024. "Executive team restructuring and corporate ESG disclosure quality," Finance Research Letters, Elsevier, vol. 66(C).
    14. Dong, Zhenlin & Wang, Junzhi, 2024. "Does public data access stimulate the efficiency of corporate green innovation?," Finance Research Letters, Elsevier, vol. 65(C).
    15. Zhang, Xiping & Fu, Aimin & Hu, Guang, 2024. "Establishment of environmental courts and corporate green innovation," Finance Research Letters, Elsevier, vol. 69(PB).
    16. Marie, Mohamed & Qi, Baolei & Elgammal, Mohammed & Elnahass, Marwa, 2024. "A more sustainable future: Can politically connected CEOs spur the nexus between ESG performance and firm financial performance?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 96(C).
    17. Liu, Deyu & Wang, Kefan & Liu, Jialin, 2024. "Can social trust foster green innovation?," Finance Research Letters, Elsevier, vol. 66(C).
    18. Yang, Jinxuan & Hui, Ning, 2024. "How digital finance affects the sustainability of corporate green innovation," Finance Research Letters, Elsevier, vol. 63(C).
    19. Liu, Xiaojing & Huang, Ningren & Su, Wunhong & Zhou, Haiyan, 2024. "Green innovation and corporate ESG performance: Evidence from Chinese listed companies," International Review of Economics & Finance, Elsevier, vol. 95(C).
    20. Chen, Qian, 2024. "Impact of sentiment tendency of media coverage on corporate green total factor productivity: The moderating role of environmental uncertainty," Finance Research Letters, Elsevier, vol. 65(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:65:y:2024:i:c:s1544612324006226. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.