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The environmental-financial nexus: Centralized environmental monitoring, eco-consciousness, and green revenues

Author

Listed:
  • Cao, June
  • Huang, Zijie
  • Liew, Millie

Abstract

Amid tightening environmental governance, we examine whether and how firms’ eco-consciousness leads to a harmonious balance between environmental and economic performance in the form of green revenues. We utilize China's centralization of environmental monitoring in 2015 as the basis for a difference-in-differences methodology, using highly and less eco-conscious firms as the treatment and control groups. We find that relative to less eco-conscious firms, highly eco-conscious firms derive greater green revenues post-centralization. This finding is robust to underlying firm characteristics and unobservable industry- and time-specific heterogeneity. Regional internet infrastructure development and corporate greenwashing mitigation facilitate the effect on highly eco-conscious firms’ green revenues, suggesting that effective centralized monitoring relies on an integrated information transmission network and an improvement in firms’ genuine environmental accountability. Overall, eco-consciousness facilitates a win-win scenario between environmental and economic performance under an increasingly strict environmental regulatory landscape.

Suggested Citation

  • Cao, June & Huang, Zijie & Liew, Millie, 2025. "The environmental-financial nexus: Centralized environmental monitoring, eco-consciousness, and green revenues," Journal of Economic Behavior & Organization, Elsevier, vol. 231(C).
  • Handle: RePEc:eee:jeborg:v:231:y:2025:i:c:s0167268125000496
    DOI: 10.1016/j.jebo.2025.106929
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    More about this item

    Keywords

    Centralization; Environmental monitoring; Environmental economic benefits; Green revenues;
    All these keywords.

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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