IDEAS home Printed from https://ideas.repec.org/a/kap/ecopln/v57y2024i2d10.1007_s10644-024-09640-x.html
   My bibliography  Save this article

Does the Yangtze River Protection Strategy help heavily polluting corporates deleverage? Evidence from corporates in the Yangtze River Economic Belt

Author

Listed:
  • Min Liu

    (Nanjing University of Aeronautics and Astronautics)

  • Yamei Li

    (Chongqing Technology and Business University)

  • Jiangfeng Hu

    (Chongqing Academy of Social Sciences)

Abstract

This paper investigates the effect of the Yangtze river protection strategy (YRPS) on the leverage of heavily polluting corporates in the Yangtze river economic belt (YREB) through a quasi-natural experiment. The findings are as follows: Firstly, the YRPS helps to deleverage heavily polluting corporates, and this deleveraging effect will increase over time. Secondly, when the corporates belong to the middle and lower reaches of the YREB and the financial supervision degree of the areas are higher, the YRPS will have a stronger inhibitory impression on the leverage of heavily polluting corporates. Thirdly, when the corporates are state-owned, technology-intensive, and capital-intensive, the YRPS will have a better deleveraging effect on heavily polluting corporates. Fourthly, the YRPS mainly works on the leverage of heavily polluting corporates by reducing the financing capacity of corporates, reducing the capital investment of corporates, and weakening the operating risks of corporates. The findings of this paper supply important policy insights for advancing the implementation of YRPS, pushing the green transformation and upgrading of heavily polluting corporates, and promoting the high-quality economic development of the YREB.

Suggested Citation

  • Min Liu & Yamei Li & Jiangfeng Hu, 2024. "Does the Yangtze River Protection Strategy help heavily polluting corporates deleverage? Evidence from corporates in the Yangtze River Economic Belt," Economic Change and Restructuring, Springer, vol. 57(2), pages 1-30, April.
  • Handle: RePEc:kap:ecopln:v:57:y:2024:i:2:d:10.1007_s10644-024-09640-x
    DOI: 10.1007/s10644-024-09640-x
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10644-024-09640-x
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    File URL: https://libkey.io/10.1007/s10644-024-09640-x?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. Yao, Wenyun & Zhang, Yi & Ma, Jingwen & Cui, Guanghui, 2023. "Does environmental regulation affect capital-labor ratio of manufacturing enterprises: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 86(C).
    2. Stefan Ambec & Mark A. Cohen & Stewart Elgie & Paul Lanoie, 2013. "The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness?," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 7(1), pages 2-22, January.
    3. Liu, Xing & Liu, Fengzhong, 2022. "Environmental regulation and corporate financial asset allocation: A natural experiment from the new environmental protection law in China," Finance Research Letters, Elsevier, vol. 47(PA).
    4. Luo, Kang & Liu, Yaobin & Chen, Pei-Fen & Zeng, Mingli, 2022. "Assessing the impact of digital economy on green development efficiency in the Yangtze River Economic Belt," Energy Economics, Elsevier, vol. 112(C).
    5. Fard, Amirhossein & Javadi, Siamak & Kim, Incheol, 2020. "Environmental regulation and the cost of bank loans: International evidence," Journal of Financial Stability, Elsevier, vol. 51(C).
    6. Robin Greenwood & Samuel G. Hanson, 2013. "Issuer Quality and Corporate Bond Returns," The Review of Financial Studies, Society for Financial Studies, vol. 26(6), pages 1483-1525.
    7. Wang, Chunhua & Wu, JunJie & Zhang, Bing, 2018. "Environmental regulation, emissions and productivity: Evidence from Chinese COD-emitting manufacturers," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 54-73.
    8. Kneller, Richard & Manderson, Edward, 2012. "Environmental regulations and innovation activity in UK manufacturing industries," Resource and Energy Economics, Elsevier, vol. 34(2), pages 211-235.
    9. Çolak, Gönül & Gungoraydinoglu, Ali & Öztekin, Özde, 2018. "Global leverage adjustments, uncertainty, and country institutional strength," Journal of Financial Intermediation, Elsevier, vol. 35(PA), pages 41-56.
    10. Chiarella, Carl & Di Guilmi, Corrado, 2011. "The financial instability hypothesis: A stochastic microfoundation framework," Journal of Economic Dynamics and Control, Elsevier, vol. 35(8), pages 1151-1171, August.
    11. Xiao, He, 2022. "Environmental regulation and firm capital structure dynamics," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 770-787.
    12. Yang, Jingyi & Shi, Daqian & Yang, Wenbo, 2022. "Stringent environmental regulation and capital structure: The effect of NEPL on deleveraging the high polluting firms," International Review of Economics & Finance, Elsevier, vol. 79(C), pages 643-656.
    13. Alter, Adrian & Elekdag, Selim, 2020. "Emerging market corporate leverage and global financial conditions," Journal of Corporate Finance, Elsevier, vol. 62(C).
    14. Margaritis, Dimitris & Psillaki, Maria, 2010. "Capital structure, equity ownership and firm performance," Journal of Banking & Finance, Elsevier, vol. 34(3), pages 621-632, March.
    15. Firth, Michael & Lin, Chen & Wong, Sonia M.L., 2008. "Leverage and investment under a state-owned bank lending environment: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 14(5), pages 642-653, December.
    16. Öztekin, Özde & Flannery, Mark J., 2012. "Institutional determinants of capital structure adjustment speeds," Journal of Financial Economics, Elsevier, vol. 103(1), pages 88-112.
    17. Shi, Xinzheng & Xu, Zhufeng, 2018. "Environmental regulation and firm exports: Evidence from the eleventh Five-Year Plan in China," Journal of Environmental Economics and Management, Elsevier, vol. 89(C), pages 187-200.
    18. Flannery, Mark J. & Rangan, Kasturi P., 2006. "Partial adjustment toward target capital structures," Journal of Financial Economics, Elsevier, vol. 79(3), pages 469-506, March.
    19. Liu, Xinghe & Wang, Enxian & Cai, Danting, 2019. "Green credit policy, property rights and debt financing: Quasi-natural experimental evidence from China," Finance Research Letters, Elsevier, vol. 29(C), pages 129-135.
    20. Wu, Haoyi & Guo, Huanxiu & Zhang, Bing & Bu, Maoliang, 2017. "Westward movement of new polluting firms in China: Pollution reduction mandates and location choice," Journal of Comparative Economics, Elsevier, vol. 45(1), pages 119-138.
    21. Luo, Pengfei & Tan, Yingxian & Yang, Jinqiang & Yao, Yanming, 2023. "Underinvestment and optimal capital structure under environmental constraints," Journal of Economic Dynamics and Control, Elsevier, vol. 157(C).
    22. Nguyen, Justin Hung & Phan, Hieu V., 2020. "Carbon risk and corporate capital structure," Journal of Corporate Finance, Elsevier, vol. 64(C).
    23. Brunnermeier, Smita B. & Cohen, Mark A., 2003. "Determinants of environmental innovation in US manufacturing industries," Journal of Environmental Economics and Management, Elsevier, vol. 45(2), pages 278-293, March.
    24. Qinghua Huang & Min Liu, 2022. "Trade openness and green total factor productivity: testing the role of environment regulation based on dynamic panel threshold model," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(7), pages 9304-9329, July.
    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. Lee, Chien-Chiang & Wang, Chih-Wei & Thinh, Bui Tien & Purnama, Muhammad Yusuf Indra & Sharma, Susan Sunila, 2024. "Corporate leverage and leverage speed of adjustment: Does environmental policy stringency matter?," Pacific-Basin Finance Journal, Elsevier, vol. 85(C).
    2. Zhang, Ming & Zhao, Yingxue, 2023. "Does environmental regulation spur innovation? Quasi-natural experiment in China," World Development, Elsevier, vol. 168(C).
    3. Gao, Yanyan & Zheng, Jianghuai, 2024. "The opposite innovation impacts of air and water pollution regulations: Evidence from the total emissions control policy in China," Journal of Asian Economics, Elsevier, vol. 92(C).
    4. Mian Yang & Yining Yuan & Fuxia Yang & Dalia Patino-Echeverri, 2021. "Effects of environmental regulation on firm entry and exit and China’s industrial productivity: a new perspective on the Porter Hypothesis," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(4), pages 915-944, October.
    5. Bakkar, Yassine, 2023. "Climate Risk and Bank Capital Structure," QBS Working Paper Series 2023/04, Queen's University Belfast, Queen's Business School.
    6. Qian Wang & Duowen Wu & Lina Yan, 2021. "Effect of positive tone in MD&A disclosure on capital structure adjustment speed: evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(4), pages 5809-5845, December.
    7. Bakkar, Yassine & De Jonghe, Olivier & Tarazi, Amine, 2023. "Does banks’ systemic importance affect their capital structure and balance sheet adjustment processes?," Journal of Banking & Finance, Elsevier, vol. 151(C).
    8. Xiao, He, 2022. "Environmental regulation and firm capital structure dynamics," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 770-787.
    9. He, Yiqing & Ding, Xin & Yang, Chuchu, 2021. "Do environmental regulations and financial constraints stimulate corporate technological innovation? Evidence from China," Journal of Asian Economics, Elsevier, vol. 72(C).
    10. Zhang, Yijun & Li, Xiaoping & Song, Yi & Jiang, Feitao, 2021. "Can green industrial policy improve total factor productivity? Firm-level evidence from China," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 51-62.
    11. Yuan, Kaihua & Cui, Jingyuan & Zhang, Haipeng & Gao, Xiang, 2023. "Do cleaner production standards upgrade the global value chain position of manufacturing enterprises? Empirical evidence from China," Energy Economics, Elsevier, vol. 128(C).
    12. Xie, Rong-hui & Yuan, Yi-jun & Huang, Jing-jing, 2017. "Different Types of Environmental Regulations and Heterogeneous Influence on “Green” Productivity: Evidence from China," Ecological Economics, Elsevier, vol. 132(C), pages 104-112.
    13. Niu, Yuhao & Wang, Sai & Wen, Wen & Li, Sifei, 2023. "Does digital transformation speed up dynamic capital structure adjustment? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    14. Yang, Jingyi & Shi, Daqian & Yang, Wenbo, 2022. "Stringent environmental regulation and capital structure: The effect of NEPL on deleveraging the high polluting firms," International Review of Economics & Finance, Elsevier, vol. 79(C), pages 643-656.
    15. Wang, Ying & Li, Mingsheng, 2022. "Credit policy and its heterogeneous effects on green innovations," Journal of Financial Stability, Elsevier, vol. 58(C).
    16. Liu, Yi & Wu, Kai & Ruan, Sirui & Kassar, Maher, 2024. "Supplier concentration and the speed of capital structure adjustment," Pacific-Basin Finance Journal, Elsevier, vol. 85(C).
    17. Peng Huang & Yue Lu & Robert Faff, 2021. "Social trust and the speed of corporate leverage adjustment: evidence from around the globe," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(2), pages 3261-3303, June.
    18. Martínez-Zarzoso, Inmaculada & Bengochea-Morancho, Aurelia & Morales-Lage, Rafael, 2019. "Does environmental policy stringency foster innovation and productivity in OECD countries?," Energy Policy, Elsevier, vol. 134(C).
    19. Ho, Ly & Bai, Min & Lu, Yue & Qin, Yafeng, 2021. "The effect of corporate sustainability performance on leverage adjustments," The British Accounting Review, Elsevier, vol. 53(5).
    20. Amini, Shahram & Elmore, Ryan & Öztekin, Özde & Strauss, Jack, 2021. "Can machines learn capital structure dynamics?," Journal of Corporate Finance, Elsevier, vol. 70(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:kap:ecopln:v:57:y:2024:i:2:d:10.1007_s10644-024-09640-x. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.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.