Shutting down or helping to transform? Green fiscal policy, fiscal decentralisation and investment efficiency of heavily polluting companies—A capacity utilisation-based perspective

Can green fiscal policy, which is a series of policies that use fiscal tools to promote green economic transformation, optimise the use of production capacity of heavily polluting companies and thus boost effective investment? Using the ESER Policy as a quasi-natural experiment to demonstrate green fiscal policy, we build a triple difference model to investigate how green fiscal policy affects the investment efficiency of heavily polluting companies. The data is based on A-share listed companies from 2005 to 2022. According to the study, green fiscal policy greatly optimizes the investment efficiency. Enterprises with high climate risk concerns or owned by state-owned and cities with low fiscal pressure or strong environmental regulations have a more obvious effect of improvement. Fiscal decentralization has weakened the positive impact of green fiscal policies on the investment efficiency of high-polluting enterprises. This inhibitory effect is mainly manifested in the excessive investment path. Mechanism tests show that financing constraints lead to resource reallocation. Green fiscal policy helps heavily polluting companies to achieve green innovation transformation, and the impact of policy-driven firm shutdown is not significant. These results provide new light on the connection between the investment efficiency of heavily polluting companies and green fiscal policies.