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Do corporate green investments improve environmental performance? Evidence from the perspective of efficiency

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  • Yutao Chen
  • Jian Feng

Abstract

By linking green investments to corporate environmental performance from the perspective of efficiency, this paper quantifies and evaluates firm-level green investment efficiency, with SBM-DEA approach and hand-collected emission data of Chinese listed companies in polluting industries. We find that corporate green investment efficiency is overall low, primarily due to excessive green investments, suggesting that managers only invest extensively in environmental dimensions without considering the efficient allocation and value-creating use of limited resources. Further, we conduct the Tobit regression and demonstrate that local environmental enforcement has an inverted U-shaped effect on green investment efficiency of polluting firms. Notably, this effect is only statistically significant in Non-SOEs and small-scale enterprises. Moreover, we document a U-shaped relationship between local environmental enforcement and excessive green investments, and this relationship is also only pronounced in Non-SOEs and small-scale firms. Our findings indicate that local governments should optimize corporate green investment efficiency through differentiated environmental regulation.

Suggested Citation

  • Yutao Chen & Jian Feng, 2019. "Do corporate green investments improve environmental performance? Evidence from the perspective of efficiency," China Journal of Accounting Studies, Taylor & Francis Journals, vol. 7(1), pages 62-92, January.
    • Handle: RePEc:taf:rcjaxx:v:7:y:2019:i:1:p:62-92
    DOI: 10.1080/21697213.2019.1625578
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    Cited by:

    1. Wei, Xuecheng & Hu, Weihua, 2023. "Revisiting resources curse hypothesis in China: Exploring the asymmetric effect of green investment and green innovation," Resources Policy, Elsevier, vol. 85(PB).
    2. Feimei Liao & Yaoyao Hu & Yinghao Sun & Songqin Ye, 2024. "Does digital empowerment affect corporate green investment efficiency?," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(9), pages 23085-23111, September.
    3. Yue, Xiao-Guang & Lu, Changyi & Pi, Saiqi & Huang, Hongyu & Manta, Otilia, 2024. "The role of mineral resources, sustainable finance, and innovation in promoting sustainable development under the IRA 2022," Resources Policy, Elsevier, vol. 90(C).
    4. Tian, Jinfang & Sun, Siyang & Cao, Wei & Bu, Di & Xue, Rui, 2024. "Make every dollar count: The impact of green credit regulation on corporate green investment efficiency," Energy Economics, Elsevier, vol. 130(C).

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