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Impacts of Environmental Regulation on Corporate ESG Performance – Evidence from China

Author

Listed:
  • Naiping Zhu

    (School of Finance and Economics, Jiangsu University.)

  • Siyi Zhang

    (School of Finance and Economics, Jiangsu University, China.)

  • Yueyong Zhou

    (School of Finance and Economics, Jiangsu University, China.)

Abstract

This paper examines the impact of the new Environmental Protection Law on corporate ESG performance and the moderating effects of executive compensation and government subsidies using the difference-in-differences (DID) model. The study found that the implementation of the new Environmental Protection Law significantly improved the ESG performance of listed companies in China's heavily polluting industries. Executive compensation and government subsidies can positively moderate the relationship between the new Environmental Protection Law and ESG. The boosting effect of the new Environmental Protection Law on corporate ESG performance is stronger in the grouping of high rule of law levels, high media attention and large corporations. Under the double carbon target, this study is of great significance to realize the sustainable development of enterprises and the high quality development of national economy.

Suggested Citation

  • Naiping Zhu & Siyi Zhang & Yueyong Zhou, 2023. "Impacts of Environmental Regulation on Corporate ESG Performance – Evidence from China," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 62-82, October.
    • Handle: RePEc:rjr:romjef:v::y:2023:i:3:p:62-82
    as

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    References listed on IDEAS

    as
    1. Firth, Michael & Fung, Peter M.Y. & Rui, Oliver M., 2006. "Corporate performance and CEO compensation in China," Journal of Corporate Finance, Elsevier, vol. 12(4), pages 693-714, September.
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    More about this item

    Keywords

    Environmental regulation; ESG; Executive compensation; Government subsidies; China’s new environmental protection law;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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