Title:
THE IMPACT OF ENVIRONMENTAL POLICIES ON CHINESE ENTERPRISES: A COMPARATIVE ANALYSIS OF RESOURCE TAXATION AND ESG ASSESSMENT ON THE FIRM PERFORMANCE AND PRODUCTION BEHAVIOR OF HEAVY POLLUTING ENTERPRISES

Authors:
Siyuan Liang, Leilei Cai and Dongjing Chen, China

Abstract:
This paper investigates and compares the impact of environmental policy and ESG scores in Chinese publicly listed firms. Over the past few years, China has placed greater emphasis on promoting environmental preservation and sustainable growth. It provides an interesting policy system setting for the present research because as a socialist nation, the Chinese government wields significant influence in policymaking. The sample for analysis is 1,117 listed firms in the heavy pollution industry, and the data involves their financial performance and environmental actions between 2012 and 2020. Utilizing time fixed-effects models, lagged effects models, and OaxacaBlinder decomposition, our analysis reveals a robust positive association between environmental policy and financial performance. Additionally, we identify a noteworthy positive implication of ESG scores on both financial and environmental performance. Overall, our evidence suggests that the influence of ESG ratings is prominently stronger than that of policy. This may suggest that policies seem to have limited direct effects on companies, whereas ESG ratings, influenced by capital investments, play a more substantial and beneficial role in enhancing overall corporate performance in these domains.