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Corruption and firm efforts on environmental protection: Evidence from a policy shock

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  • Yang, Cheng
  • Zhang, Wenzhe
  • Sheng, Yan
  • Yang, Zhiqing

Abstract

This paper evaluates the causal effects of China's anti-corruption campaign on corporate environmental costs. Using primary data and the investigations of the anti-corruption campaign as a quasi-natural experiment, our difference-in-differences estimation shows that: (1) the inspections encourages heavy pollution enterprises to increase investment in environmental protection; (2) our findings are particularly pronounced in subsamples of SOEs, non-SOEs with political connections, firms with more related party transaction, with less government’ intervention, with more financing constrains and information asymmetry. Overall, this paper links the corruption and environmental protection, which is helpful for the governments to improve the environment circumstances through political channel.

Suggested Citation

  • Yang, Cheng & Zhang, Wenzhe & Sheng, Yan & Yang, Zhiqing, 2021. "Corruption and firm efforts on environmental protection: Evidence from a policy shock," Pacific-Basin Finance Journal, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:pacfin:v:65:y:2021:i:c:s0927538x20306776
    DOI: 10.1016/j.pacfin.2020.101465
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