IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v139y2024ics0140988324006236.html
   My bibliography  Save this article

How do heavily polluting firms cope with dual environmental regulation? A study from the perspective of financial asset allocation

Author

Listed:
  • Ren, Shenggang
  • Zhou, Qiong
  • Zhang, Xinxin
  • Zeng, Huixiang

Abstract

In view of the current debate on the relationship between environmental regulation and firm financial asset allocation (FFAA), this study explores the compound effect of binding environmental regulation (BER) and public environmental engagement (PEE) on FFAA. The results show that the single constraint of BER cannot effectively inhibit FFAA, and that the governance effect can only be produced in coordination with PEE. In particular, in state-owned enterprises, areas with a high marketization level, and areas with strong environmental supervision, the synergistic governance effect of dual environmental regulation is more obvious. The inhibition effect mainly depends on the reduction of long-term FFAA, and can simultaneously improve firms' economic and environmental benefits. A mechanism analysis finds that strengthening firm research and development (R&D) innovation and improving total factor productivity are important channels through which dual environmental regulation can collaboratively govern firms to avoid the shift from the real economy to the virtual economy. This study provides new insights for the analysis of the real economy from the perspective of environmental regulation, and also serves as a reference for the improvement of multiple collaborative environmental governance systems.

Suggested Citation

  • Ren, Shenggang & Zhou, Qiong & Zhang, Xinxin & Zeng, Huixiang, 2024. "How do heavily polluting firms cope with dual environmental regulation? A study from the perspective of financial asset allocation," Energy Economics, Elsevier, vol. 139(C).
    • Handle: RePEc:eee:eneeco:v:139:y:2024:i:c:s0140988324006236
    DOI: 10.1016/j.eneco.2024.107915
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988324006236
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2024.107915?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Zhao, Ziyi & Zhao, Yuhuan & Lv, Xin & Li, Xiaoping & Zheng, Lu & Fan, Shunan & Zuo, Sumin, 2024. "Environmental regulation and green innovation: Does state ownership matter?," Energy Economics, Elsevier, vol. 136(C).
    2. Wentao GU & Xiaoyan ZHENG & Liyan PAN & Hengkui LI, 2018. "Economic Policy Uncertainty, Bank Credit, External Demand, and Corporate Investment," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 52-72, September.
    3. Zhang, Xiaoliang & Zheng, Xiaojia, 2024. "Does carbon emission trading policy induce financialization of non-financial firms? Evidence from China," Energy Economics, Elsevier, vol. 131(C).
    4. Huixiang Zeng & Xinxin Zhang & Qiong Zhou & Youliang Jin & Jin Cao, 2022. "Tightening of environmental regulations and corporate environmental irresponsibility: a quasi-natural experiment," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(11), pages 13218-13259, November.
    5. Gray, Wayne B, 1987. "The Cost of Regulation: OSHA, EPA and the Productivity Slowdown," American Economic Review, American Economic Association, vol. 77(5), pages 998-1006, December.
    6. Zhang, Shengling & Li, Yue & Hao, Yu & Zhang, Yipeng, 2018. "Does public opinion affect air quality? Evidence based on the monthly data of 109 prefecture-level cities in China," Energy Policy, Elsevier, vol. 116(C), pages 299-311.
    7. Xingqiang Du & Yingying Chang & Quan Zeng & Yingjie Du & Hongmei Pei, 2016. "Corporate environmental responsibility (CER) weakness, media coverage, and corporate philanthropy: Evidence from China," Asia Pacific Journal of Management, Springer, vol. 33(2), pages 551-581, June.
    8. Jonah Busch & Irene Ring & Monique Akullo & Oyut Amarjargal & Maud Borie & Rodrigo S. Cassola & Annabelle Cruz-Trinidad & Nils Droste & Joko Tri Haryanto & Ulan Kasymov & Nataliia Viktorivna Kotenko &, 2021. "A global review of ecological fiscal transfers," Nature Sustainability, Nature, vol. 4(9), pages 756-765, September.
    9. Michael E. Porter & Claas van der Linde, 1995. "Toward a New Conception of the Environment-Competitiveness Relationship," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 97-118, Fall.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhao, Jinjing & Li, Ai & Roh, Taewoo & Su, Miao, 2025. "Escaping regulation or embracing innovation? Substantive green Innovation's role in moderating environmental policy and outward foreign direct investment," Energy, Elsevier, vol. 316(C).
    2. Lin, Yongjia & Deng, Hong & Wang, Yizhi, 2025. "Institutional investors’ site visits and corporate financialization in China," International Review of Financial Analysis, Elsevier, vol. 97(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Liu, Duan & Yu, Nizhou & Wan, Hong, 2022. "Does water rights trading affect corporate investment? The role of resource allocation and risk mitigation channels," Economic Modelling, Elsevier, vol. 117(C).
    2. Zhang, Fengtai & Xiao, Yuedong & Gao, Lei & Ma, Dalai & Su, Ruiqi & Yang, Qing, 2022. "How agricultural water use efficiency varies in China—A spatial-temporal analysis considering unexpected outputs," Agricultural Water Management, Elsevier, vol. 260(C).
    3. He, Yiqing & Ding, Xin & Yang, Chuchu, 2021. "Do environmental regulations and financial constraints stimulate corporate technological innovation? Evidence from China," Journal of Asian Economics, Elsevier, vol. 72(C).
    4. Filiou, Despoina & Kesidou, Effie & Wu, Lichao, 2023. "Are smart cities green? The role of environmental and digital policies for Eco-innovation in China," World Development, Elsevier, vol. 165(C).
    5. Huang, Hongyun & Mbanyele, William & Wang, Fengrong & Song, Malin & Wang, Yuzhang, 2022. "Climbing the quality ladder of green innovation: Does green finance matter?," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    6. Zhang, Xiaoding & Niu, Yiran & Si, Deng-kui & Xiao, Zumian, 2024. "Regulatory greening: The impact of environmental legislation on corporate green innovation," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 359-376.
    7. Qiong Yao & Suzhen Zeng & Shibin Sheng & Shiyuan Gong, 2021. "Green innovation and brand equity: moderating effects of industrial institutions," Asia Pacific Journal of Management, Springer, vol. 38(2), pages 573-602, June.
    8. Xu, Le & Yang, Lili & Li, Ding & Shao, Shuai, 2023. "Asymmetric effects of heterogeneous environmental standards on green technology innovation: Evidence from China," Energy Economics, Elsevier, vol. 117(C).
    9. Siedschlag, Iulia & Yan, Weijie, 2023. "Do green investments improve firm performance? Empirical evidence from Ireland," Technological Forecasting and Social Change, Elsevier, vol. 186(PB).
    10. Zhang, Yaxin & Zeng, Shibo & Wu, Qiaosheng & Fu, Junyi & Li, Tongping, 2023. "A study on the impact of the carbon emissions trading policy on the mining industry based on Porter hypothesis," Resources Policy, Elsevier, vol. 87(PB).
    11. Galasso, Alberto & Luo, Hong & Zhu, Brooklynn, 2023. "Laboratory safety and research productivity," Research Policy, Elsevier, vol. 52(8).
    12. Shadbegian, Ronald J. & Gray, Wayne B., 2005. "Pollution abatement expenditures and plant-level productivity: A production function approach," Ecological Economics, Elsevier, vol. 54(2-3), pages 196-208, August.
    13. Shaun Larcom & Ferdinand Rauch & Tim Willems, 2017. "The Benefits of Forced Experimentation: Striking Evidence from the London Underground Network," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(4), pages 2019-2055.
    14. Li, Jianjun & Wu, Zhouyi & Feng, Lingbing, 2024. "How does environmental regulation affect corporate tax burdens? Evidence from China's environmental courts," Economic Modelling, Elsevier, vol. 130(C).
    15. Chabowski, Brian & Chiang, Wen-Chyuan & Deng, Kailing & Sun, Li, 2019. "Environmental inefficiency and bond credit rating," Journal of Economics and Business, Elsevier, vol. 101(C), pages 17-37.
    16. Lu, Zhiqiang & Li, Hongyu, 2023. "Does environmental information disclosure affect green innovation?," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 47-59.
    17. Morgenstern, Richard D. & Pizer, William A. & Shih, Jhih-Shyang, 2002. "Jobs Versus the Environment: An Industry-Level Perspective," Journal of Environmental Economics and Management, Elsevier, vol. 43(3), pages 412-436, May.
    18. Jin, Youliang & Wang, Shujuan & Cheng, Xu & Zeng, Huixiang, 2024. "Can environmental tax reform curb corporate environmental violations? A quasi-natural experiment based on China's “environmental fees to taxes”," Journal of Business Research, Elsevier, vol. 171(C).
    19. Xu, Nianhang & Li, Min & Xie, Rongrong & Chan, Kam C., 2024. "Double standards? The adverse impact of chairperson hometown ties on corporate green innovation," Journal of Corporate Finance, Elsevier, vol. 88(C).
    20. Rassier, Dylan G. & Earnhart, Dietrich, 2015. "Effects of environmental regulation on actual and expected profitability," Ecological Economics, Elsevier, vol. 112(C), pages 129-140.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:139:y:2024:i:c:s0140988324006236. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.