IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v75y2025ics1544612325001242.html
   My bibliography  Save this article

Environmental courts, environmental investment, and corporate carbon emissions

Author

Listed:
  • Luo, Zhenxiang
  • Zhou, Xiaolin

Abstract

Using data from Chinese listed companies from 2011 to 2022, this study examines the relationship between environmental courts and corporate carbon emissions. Findings indicate that a significant negative correlation exists between the presence of environmental courts and the level of corporate carbon emissions. Further analysis reveals that environmental investment plays a crucial moderating role, significantly influencing this relationship. Heterogeneity analysis found significant differences in the moderating role of environmental investment between high-polluting and non-high-polluting companies.

Suggested Citation

  • Luo, Zhenxiang & Zhou, Xiaolin, 2025. "Environmental courts, environmental investment, and corporate carbon emissions," Finance Research Letters, Elsevier, vol. 75(C).
    • Handle: RePEc:eee:finlet:v:75:y:2025:i:c:s1544612325001242
    DOI: 10.1016/j.frl.2025.106859
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612325001242
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2025.106859?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. Hu, Qianlin & Mijit, Razia & Xu, Jingxuan & Miao, Shan, 2024. "Can government-led urban expansion simultaneously alleviate pollution and carbon emissions? Staggered difference-in-differences evidence from Chinese firms," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 1-25.
    2. Wang, En-Ze & Lee, Chien-Chiang, 2022. "The impact of clean energy consumption on economic growth in China: Is environmental regulation a curse or a blessing?," International Review of Economics & Finance, Elsevier, vol. 77(C), pages 39-58.
    3. Dong, Kangyin & Ni, Guohua & Taghizadeh-Hesary, Farhad & Zhao, Congyu, 2023. "Does smart transportation matter in inhibiting carbon inequality?," Energy Economics, Elsevier, vol. 126(C).
    4. Ghlamallah, E. & C. Alexakis & M. Dowling & Piepenbrink, A., 2021. "The topics of Islamic economics and finance research," Post-Print hal-03323676, HAL.
    5. Dongmin Kong & Ling Zhu, 2022. "Governments’ Fiscal Squeeze and Firms’ Pollution Emissions: Evidence from a Natural Experiment in China," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 81(4), pages 833-866, April.
    6. Yinpeng Zhang & Ying Chen & You Wu & Panpan Zhu, 2022. "Investor attention and carbon return: evidence from the EU-ETS," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 35(1), pages 709-727, December.
    7. Di Pietro, Francesca & Butticè, Vincenzo, 2020. "Institutional characteristics and the development of crowdfunding across countries," International Review of Financial Analysis, Elsevier, vol. 71(C).
    8. Dong, Xiyong & Xiong, Youlin & Nie, Siyue & Yoon, Seong-Min, 2023. "Can bonds hedge stock market risks? Green bonds vs conventional bonds," Finance Research Letters, Elsevier, vol. 52(C).
    9. Zhang, Qi & Yu, Zhi & Kong, Dongmin, 2019. "The real effect of legal institutions: Environmental courts and firm environmental protection expenditure," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    10. Zhong, Wenli & Liu, Yang & Dong, Kangyin & Ni, Guohua, 2024. "Assessing the synergistic effects of artificial intelligence on pollutant and carbon emission mitigation in China," Energy Economics, Elsevier, vol. 138(C).
    11. Yan Wu & Chunlai Chen & Cong Hu, 2023. "The impacts of trade intensity with China on carbon emissions in belt and road countries," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 28(2), pages 558-577, April.
    12. Ezzedine Ghlamallah & Christos Alexakis & Michael Dowling & Anke Piepenbrink, 2021. "The topics of Islamic economics and finance research," Post-Print hal-03511406, HAL.
    13. Huang, Xiaoqi & Liu, Wei & Zhang, Zhan & Zhao, Zhihui, 2022. "Intensive judicial oversight and corporate green innovations: Evidence from a quasi-natural experiment in China," China Economic Review, Elsevier, vol. 74(C).
    14. Azimli, Asil, 2023. "The impact of climate policy uncertainty on firm value: Does corporate social responsibility engagement matter?," Finance Research Letters, Elsevier, vol. 51(C).
    15. Phan, Dinh Hoang Bach & Tran, Vuong Thao & Ming, Tee Chwee & Le, Anh, 2022. "Carbon risk and corporate investment: A cross-country evidence," Finance Research Letters, Elsevier, vol. 46(PB).
    16. Chen, Zhongfei & Xie, Guanxia, 2022. "ESG disclosure and financial performance: Moderating role of ESG investors," International Review of Financial Analysis, Elsevier, vol. 83(C).
    17. Paramati, Sudharshan Reddy & Mo, Di & Huang, Ruixian, 2021. "The role of financial deepening and green technology on carbon emissions: Evidence from major OECD economies," Finance Research Letters, Elsevier, vol. 41(C).
    18. Zhi Yu & Yali Cao & Mo Liu, 2022. "Does carbon emission trading policy affect bank loans of firms? Evidence from China," Applied Economics Letters, Taylor & Francis Journals, vol. 29(18), pages 1709-1714, October.
    19. Hou, Xiang & Hu, Qianlin & Liang, Xin & Xu, Jingxuan, 2023. "How do low-carbon city pilots affect carbon emissions? Staggered difference in difference evidence from Chinese firms," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 664-686.
    20. Xu, Hao & Xu, Jingxuan & Wang, Jie & Hou, Xiang, 2023. "Reduce production or increase efficiency? Hazardous air pollutants regulation, energy use, and the synergistic effect on industrial enterprises' carbon emission," Energy Economics, Elsevier, vol. 126(C).
    21. Xing, Chao & Zhang, Yuming & Tripe, David, 2021. "Green credit policy and corporate access to bank loans in China: The role of environmental disclosure and green innovation," International Review of Financial Analysis, Elsevier, vol. 77(C).
    22. Bingler, Julia Anna & Kraus, Mathias & Leippold, Markus & Webersinke, Nicolas, 2022. "Cheap talk and cherry-picking: What ClimateBert has to say on corporate climate risk disclosures," Finance Research Letters, Elsevier, vol. 47(PB).
    23. Dong, Baomin & Guo, Yibei & Hu, Xiaotian, 2022. "Intellectual property rights protection and export product quality: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 77(C), pages 143-158.
    24. Yuan, Huaxi & Zou, Longhui & Feng, Yidai, 2023. "How to achieve emission reduction without hindering economic growth? The role of judicial quality," Ecological Economics, Elsevier, vol. 209(C).
    25. Qi, Xiulin & Wu, Zhifang & Xu, Jinqing & Shan, Biaoan, 2023. "Environmental justice and green innovation: A quasi-natural experiment based on the establishment of environmental courts in China," Ecological Economics, Elsevier, vol. 205(C).
    26. Ghlamallah, Ezzedine & Alexakis, Christos & Dowling, Michael & Piepenbrink, Anke, 2021. "The topics of Islamic economics and finance research," International Review of Economics & Finance, Elsevier, vol. 75(C), pages 145-160.
    27. Zhang, Dongyang, 2021. "Green credit regulation, induced R&D and green productivity: Revisiting the Porter Hypothesis," International Review of Financial Analysis, Elsevier, vol. 75(C).
    Full references (including those not matched with items on IDEAS)

    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. Dai, Jiapeng, 2025. "Is policy pilot a viable path to sustainable development? Attention allocation perspective," International Review of Financial Analysis, Elsevier, vol. 98(C).
    2. Cai, Xiaotong & Yuan, Bo & Wu, Chao, 2025. "An integrated CEEMDAN and TCN-LSTM deep learning framework for forecasting," International Review of Financial Analysis, Elsevier, vol. 98(C).
    3. Chen, Songyi & Fan, Qianqian, 2025. "Can market-based environmental regulation promote corporate intelligent transformation: Evidence from the carbon emission trading system," Finance Research Letters, Elsevier, vol. 76(C).
    4. Wan, Min & Wei, Dedai & Yu, Chenming, 2025. "Low-carbon pilot cities and financialization of listed companies: Inhibitory effects and policy analysis," Finance Research Letters, Elsevier, vol. 71(C).
    5. Wang, Hongyan & Cheng, Jiandong & Zhou, Hang, 2025. "Tax administration informatization, financial tightened regulation, and firm productivity: A quasi-natural experiment based on the "Golden Tax Phase III project"," International Review of Economics & Finance, Elsevier, vol. 98(C).
    6. Zhang, Ruifeng & Song, Shuhong & Xiu, Weiya, 2025. "Does the efficiency of capital allocation have spatial carbon emission spillover effects?," International Review of Financial Analysis, Elsevier, vol. 99(C).
    7. Peng, Shengnan & Liu, Chan & Wang, Ze & Ye, Zihan & Sun, Xialing & Tan, Zhanglu, 2024. "The impact of the carbon reduction policy effectiveness on energy companies' ESG performance," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    8. Li, Yuantian & Xu, Haoyu & Li, Huiru & Xu, Yingming, 2025. "Environmental regulation, opening up to the outside world, and regional green industry development: Policy effects and optimization strategies," Finance Research Letters, Elsevier, vol. 75(C).
    9. Li, Yuantian & Xu, Haoyu & Li, Huiru & Xu, Yingming, 2025. "Digital economy, environmental regulations, and green economic development," Finance Research Letters, Elsevier, vol. 75(C).
    10. Wang, Yanpeng & Cui, Lianbiao & Zhou, Jie, 2025. "The impact of green finance and digital economy on regional carbon emission reduction," International Review of Economics & Finance, Elsevier, vol. 97(C).
    11. Wang, Jingru & Liu, Tinghua & Aziz, Noshaba & Sui, Hongguang, 2024. "Exploring the role of trade credit in facilitating low-carbon development: Insights from Chinese enterprises," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    12. Goodell, John W. & Gurdgiev, Constantin & Karim, Sitara & Palma, Alessia, 2024. "Carbon emissions and liquidity management," International Review of Financial Analysis, Elsevier, vol. 95(PA).
    13. Ren, Xiaohang & Lu, Qian & Gozgor, Giray & Fu, Haiqin, 2025. "Natural gas and the battle of carbon emissions: Interpreting the spatial effects of provincial carbon emissions in China," International Review of Economics & Finance, Elsevier, vol. 97(C).
    14. Wang, Juling & Liu, Lihua & Ou, Yangchao, 2024. "Low-carbon city pilot policy and corporate environmental violations: Evidence from heavily polluting firms in China," Finance Research Letters, Elsevier, vol. 65(C).
    15. Chang, Lulu & Fang, Senhui, 2025. "Bringing carbon emission reduction to fruition: Insights from city’s low-carbon policy intensity," Finance Research Letters, Elsevier, vol. 72(C).
    16. Huang, Yuting & Wen, Wen & Bao, Rui, 2024. "Carbon emission right circulation and corporate green innovation: Evidence from a quasi-natural experiment in China," Finance Research Letters, Elsevier, vol. 69(PA).
    17. Daniel K. Maduku & Steven Mbeya, 2024. "Understanding family takaful purchase behaviour: the roles of religious obligation and gender," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 29(2), pages 440-458, June.
    18. Cheng, Bo & An, Zhimeng & Li, Wei, 2025. "Regulatory enforcement and firm sustainability: Evidence from China's environmental public interest litigation reform," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 530-545.
    19. Yamin Li & Guo Wu, 2025. "The green advantage: mapping the profit power of green credit in commercial banks," Economic Change and Restructuring, Springer, vol. 58(2), pages 1-29, April.
    20. Zhou, Peng & Huang, Xiaoqi & Song, Frank M., 2024. "The deterrent effect of environmental judicature on firms' pollution emissions: Evidence from a quasi-natural experiment in China," China Economic Review, Elsevier, vol. 88(C).

    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:finlet:v:75:y:2025:i:c:s1544612325001242. 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/frl .

    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.