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The effect of environmental regulations on innovation in heavy-polluting and resource-based enterprises: Quasi-natural experimental evidence from China

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  • Ting Liu
  • Meijuan Liu
  • Xiaohan Hu
  • Bangsheng Xie

Abstract

Environmental protection regulations adopted by governments affect the microeconomic behavior of enterprises. The Chinese government began piloting the outgoing leading officials’ accountability audit of natural resources assets (OANRA) in some regions in 2014. Based on this quasi-natural experimental setting, this paper chose heavy-polluting and resource-based enterprises in pilot regions of China from 2011 to 2016 as examples for studying the impact of the OANRA on enterprise innovation and further examines the role of government subsidies in this process. The study finds that the OANRA has no significant impact on enterprise innovation. However, with support from government subsidies, the OANRA dramatically accelerates enterprise innovation investment. The results are still seen after applying propensity matching analysis (PSM), balancing panel data and deleting special provinces. Further analysis shows that this effect is more obvious among small-scale, state-owned enterprises that are located in areas with high degrees of marketization and high bank credit constraints. This study advances the research of the OANRA’s effects on the microeconomic behavior of enterprises. Moreover, the adjustment effect of government subsidies also provides great reference value to making rational use of policy to cooperate with the OANRA.

Suggested Citation

  • Ting Liu & Meijuan Liu & Xiaohan Hu & Bangsheng Xie, 2020. "The effect of environmental regulations on innovation in heavy-polluting and resource-based enterprises: Quasi-natural experimental evidence from China," PLOS ONE, Public Library of Science, vol. 15(12), pages 1-18, December.
    • Handle: RePEc:plo:pone00:0239549
    DOI: 10.1371/journal.pone.0239549
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    References listed on IDEAS

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    Cited by:

    1. Yuanyang Wang & Yanlin Yang & Chenyu Fu & Zengzeng Fan & Xiaoping Zhou, 2021. "Environmental regulation, environmental responsibility, and green technology innovation: Empirical research from China," PLOS ONE, Public Library of Science, vol. 16(9), pages 1-21, September.
    2. Huixiang Zeng & Xuemei Li & Qiong Zhou & Lin Wang, 2022. "Local government environmental regulatory pressures and corporate environmental strategies: Evidence from natural resource accountability audits in China," Business Strategy and the Environment, Wiley Blackwell, vol. 31(7), pages 3060-3082, November.

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