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The Impact of Local Government Environmental Target Constraints on the Performance of Heavy Pollution Industries

Author

Listed:
  • Hong Xu

    (Business School, Shandong Normal University, Jinan 250358, China)

  • Kai Lin

    (Business School, Shandong Normal University, Jinan 250358, China)

  • Lei Qiu

    (Economics School, Anhui University, Hefei 230601, China)

Abstract

The world is plagued by difficult problems such as ecological degradation and resource depletion. This study utilizes data from 664 Shanghai and Shenzhen A-share listed enterprises in the heavy pollution industry from 2007 to 2019; this paper constructs a two-way fixed effects panel model and a mediated effect model to test the relevant effects of local government environmental target constraints (LGETCs) on the performance of heavy pollution enterprises (HPEs). The main findings are as follows: First, LGETCs significantly inhibit the short-term performance of HPEs. Second, LGETCs have a heterogeneous impact on the short-term performance of HPEs based on regional, industry, and firm ownership differences. This sentence suggests that local environmental targets can exert a restraining effect on the short-term performance of heavily polluting companies by influencing factors such as financial constraints, agency costs, and levels of technological innovation. In this context, financial constraints and agency costs act as mediating factors, while corporate technological innovation and green technological innovation act as masking factors in this relationship. The sentence appears to suggest that local environmental targets can indirectly have a positive impact on the long-term performance of heavily polluting companies through innovative incentives. Furthermore, the research in this article provides theoretical support for local government efforts to address deteriorating ecological environments and expedite energy conservation and emission reduction in heavily polluting companies.

Suggested Citation

  • Hong Xu & Kai Lin & Lei Qiu, 2023. "The Impact of Local Government Environmental Target Constraints on the Performance of Heavy Pollution Industries," Sustainability, MDPI, vol. 15(22), pages 1-24, November.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:22:p:15997-:d:1281320
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