IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v16y2024i2p577-d1315894.html
   My bibliography  Save this article

Environmental Protection Tax and Green Innovation: The Mediating Role of Digitalization and ESG

Author

Listed:
  • Guixiang Cao

    (College of Business Administration, Capital University of Economics and Business, Beijing 100070, China)

  • Jinghuai She

    (College of Business Administration, Capital University of Economics and Business, Beijing 100070, China)

  • Chengzi Cao

    (College of Business Administration, Capital University of Economics and Business, Beijing 100070, China)

  • Qiuxiang Cao

    (School of Earth Science, East China University of Technology, Nanchang 330013, China
    School of Biological, Earth & Environmental Sciences, University of New South Wales, Sydney, SW 2033, Australia)

Abstract

In the wave of the digital economy and “carbon neutrality”, digital governance and green governance are effective measures for firms to achieve sustainable development goals. The purpose of this paper is to examine the impact of environmental protection tax (EPT) policies on green innovation (GI) using panel data from Chinese A-share listed firms from 2010 to 2022. Using fixed effects models, we find that EPT significantly promotes firms’ GI. Mechanism tests reveal that digitalization and environment, social, and governance (ESG) performance both mediate the relationship between EPT and GI. Further analysis shows that government subsidies and analyst coverage both strengthen the effect of EPT on GI, while supplier concentration exerts a reverse moderating influence. Economic outcome tests confirm the multiple impacts of EPT in improving total factor productivity (TFP) and economic performance through GI. Our findings contribute to fulfilling the extant literature gap on the relationship between EPT and GI, and provide practical insights for firms engaged in digital and green governance.

Suggested Citation

  • Guixiang Cao & Jinghuai She & Chengzi Cao & Qiuxiang Cao, 2024. "Environmental Protection Tax and Green Innovation: The Mediating Role of Digitalization and ESG," Sustainability, MDPI, vol. 16(2), pages 1-26, January.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:2:p:577-:d:1315894
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/16/2/577/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/16/2/577/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Lanjouw, Jean Olson & Mody, Ashoka, 1996. "Innovation and the international diffusion of environmentally responsive technology," Research Policy, Elsevier, vol. 25(4), pages 549-571, June.
    2. Daron Acemoglu & Ufuk Akcigit & Douglas Hanley & William Kerr, 2016. "Transition to Clean Technology," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 52-104.
    3. Pinglin He & Qiao Ya & Long Chengfeng & Yuan Yuan & Chen Xiao, 2021. "Nexus between Environmental Tax, Economic Growth, Energy Consumption, and Carbon Dioxide Emissions: Evidence from China, Finland, and Malaysia Based on a Panel-ARDL Approach," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(3), pages 698-712, February.
    4. Wei, Xiahai & Wei, Qingfang & Yang, Lisha, 2023. "Induced green innovation of suppliers: The “green power” from major customers," Energy Economics, Elsevier, vol. 124(C).
    5. Fullerton, Don & Kim, Seung-Rae, 2008. "Environmental investment and policy with distortionary taxes, and endogenous growth," Journal of Environmental Economics and Management, Elsevier, vol. 56(2), pages 141-154, September.
    6. Zhang, Jinzhu & Liu, Yu & Zhou, Meifang & Chen, Boyang & Liu, Yawen & Cheng, Baodong & Xue, Jinjun & Zhang, Wei, 2022. "Regulatory effect of improving environmental information disclosure under environmental tax in China: From the perspectives of temporal and industrial heterogeneity," Energy Policy, Elsevier, vol. 164(C).
    7. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 317-341.
    8. Zhiqiang Zhou & Wenyan Liu & Huilin Wang & Jingyu Yang, 2022. "The Impact of Environmental Regulation on Agricultural Productivity: From the Perspective of Digital Transformation," IJERPH, MDPI, vol. 19(17), pages 1-19, August.
    9. Xie, Xuemei & Huo, Jiage & Zou, Hailiang, 2019. "Green process innovation, green product innovation, and corporate financial performance: A content analysis method," Journal of Business Research, Elsevier, vol. 101(C), pages 697-706.
    10. Asquith, Paul & Mikhail, Michael B. & Au, Andrea S., 2005. "Information content of equity analyst reports," Journal of Financial Economics, Elsevier, vol. 75(2), pages 245-282, February.
    11. Yuanshuo Xu & Jiahe Liang & Zhaoyingzi Dong & Minjun Shi, 2022. "Can Environmental Regulation Promote Green Innovation and Productivity? The Moderating Role of Government Interventions in Urban China," IJERPH, MDPI, vol. 19(21), pages 1-17, October.
    12. Qian, Xuesong & Ding, Hai & Ding, Zifang, 2023. "Governmental inspection and firm environmental protection expenditure: Evidence from China," Economic Modelling, Elsevier, vol. 123(C).
    13. Yang Shen & Xiuwu Zhang, 2022. "Study on the Impact of Environmental Tax on Industrial Green Transformation," IJERPH, MDPI, vol. 19(24), pages 1-18, December.
    14. Shiliang Hu & Wenhao Dong & Yongchun Huang, 2023. "Analysts’ Green Coverage and Corporate Green Innovation in China: The Moderating Effect of Corporate Environmental Information Disclosure," Sustainability, MDPI, vol. 15(7), pages 1-22, March.
    15. Guixiang Cao & Xintong Fang & Ying Chen & Jinghuai She, 2023. "Regional Big Data Application Capability and Firm Green Technology Innovation," Sustainability, MDPI, vol. 15(17), pages 1-29, August.
    16. Weichieh Su & Mike W. Peng & Weiqiang Tan & Yan-Leung Cheung, 2016. "The Signaling Effect of Corporate Social Responsibility in Emerging Economies," Journal of Business Ethics, Springer, vol. 134(3), pages 479-491, March.
    17. Milliman, Scott R. & Prince, Raymond, 1989. "Firm incentives to promote technological change in pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 17(3), pages 247-265, November.
    18. Li Li & Jean Chen & Hongli Gao & Li Xie, 2019. "The certification effect of government R&D subsidies on innovative entrepreneurial firms’ access to bank finance: evidence from China," Small Business Economics, Springer, vol. 52(1), pages 241-259, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. ErShang Tian & Sung Ook Park, 2024. "Environmental Protection Tax (EPT) and Its Influence on Firms’ Financial Health and Innovation Capabilities: Evidence from Chinese Listed Companies," Sustainability, MDPI, vol. 16(23), pages 1-16, December.

    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. Hua Cheng & Yinhong Yu & Shiyu Zhang, 2024. "Subsidies, green innovation, and the sustainable performance: evidence from heavy-polluting enterprises in China," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 14(1), pages 102-116, March.
    2. Cameron Hepburn & Jacquelyn Pless & David Popp, 2018. "Policy Brief—Encouraging Innovation that Protects Environmental Systems: Five Policy Proposals," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 12(1), pages 154-169.
    3. Ye, Fanglin & Paulson, Nicholas & Khanna, Madhu, 2022. "Are renewable energy policies effective to promote technological change? The role of induced technological risk," Journal of Environmental Economics and Management, Elsevier, vol. 114(C).
    4. Yu-Hong Ai & Di-Yun Peng & Huan-Huan Xiong, 2021. "Impact of Environmental Regulation Intensity on Green Technology Innovation: From the Perspective of Political and Business Connections," Sustainability, MDPI, vol. 13(9), pages 1-23, April.
    5. Kalaivani Jayaraman & Sreenivasan Jayashree & Magiswary Dorasamy, 2023. "The Effects of Green Innovations in Organizations: Influence of Stakeholders," Sustainability, MDPI, vol. 15(2), pages 1-13, January.
    6. Artur Santoalha & Ron Boschma, 2021. "Diversifying in green technologies in European regions: does political support matter?," Regional Studies, Taylor & Francis Journals, vol. 55(2), pages 182-195, February.
    7. Stavins, Robert & Jaffe, Adam & Newell, Richard, 2000. "Technological Change and the Environment," Working Paper Series rwp00-002, Harvard University, John F. Kennedy School of Government.
    8. Singer, Gregor, 2024. "Complementary inputs and industrial development: can lower electricity prices improve energy efficiency?," LSE Research Online Documents on Economics 122365, London School of Economics and Political Science, LSE Library.
    9. Rik L. Rozendaal & Herman R. J. Vollebergh, 2021. "Policy-Induced Innovation in Clean Technologies: Evidence from the Car Market," CESifo Working Paper Series 9422, CESifo.
    10. Tang, Maogang & Li, Xiuzhen & Zhang, Yun & Wu, Yingtao & Wu, Baijun, 2020. "From command-and-control to market-based environmental policies: Optimal transition timing and China’s heterogeneous environmental effectiveness," Economic Modelling, Elsevier, vol. 90(C), pages 1-10.
    11. Filiou, Despoina & Kesidou, Effie & Wu, Lichao, 2023. "Are smart cities green? The role of environmental and digital policies for Eco-innovation in China," World Development, Elsevier, vol. 165(C).
    12. Lu, Yunguo & Zhang, Lin, 2022. "National mitigation policy and the competitiveness of Chinese firms," Energy Economics, Elsevier, vol. 109(C).
    13. Maogang Tang & Silu Cheng & Wenqing Guo & Weibiao Ma & Fengxia Hu, 2023. "Relationship between carbon emission trading schemes and companies’ total factor productivity: evidence from listed companies in China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 11735-11767, October.
    14. Kesidou, Effie & Wu, Lichao, 2020. "Stringency of environmental regulation and eco-innovation: Evidence from the eleventh Five-Year Plan and green patents," Economics Letters, Elsevier, vol. 190(C).
    15. Costantini, Valeria & Crespi, Francesco, 2008. "Environmental regulation and the export dynamics of energy technologies," Ecological Economics, Elsevier, vol. 66(2-3), pages 447-460, June.
    16. Oscar Afonso & Ana Catarina Afonso, 2015. "Endogenous Growth Effects of Environmental Policies," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(5), pages 607-629, December.
    17. Hattori, Keisuke, 2011. "Optimal Environmental Policy under Monopolistic Provision of Clean Technologies," MPRA Paper 28837, University Library of Munich, Germany.
    18. Ma, Xinru & He, Jingbin, 2023. "Air pollution and corporate green innovation in China," Economic Modelling, Elsevier, vol. 124(C).
    19. Wang, Ying & Li, Mingsheng, 2022. "Credit policy and its heterogeneous effects on green innovations," Journal of Financial Stability, Elsevier, vol. 58(C).
    20. Adam B. Jaffe & Karen Palmer, 1997. "Environmental Regulation And Innovation: A Panel Data Study," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 610-619, November.

    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:gam:jsusta:v:16:y:2024:i:2:p:577-:d:1315894. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.