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From rules to results: How the ecological rule of law drives corporate pollution reduction

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  • Wang, Chuanfei
  • Sun, Pu

Abstract

Robust ecological and environmental legal protections are vital for reducing pollution intensity, which is essential for balancing high-quality economic development and ecological benefits. Using the establishment of environmental courts in China as a quasi-natural experiment, this study examines how the ecological rule of law affects corporate pollution and the underlying mechanism. It employs a multiperiod propensity score matching–difference-in-differences model and analyzes data from Chinese A-share listed companies from 2007 to 2022. Results indicate that environmental courts significantly reduce corporate pollution intensity by encouraging green investor behavior. Heterogeneity analysis shows that this is particularly evident in resource-based cities. This study contributes to the literature on the influence of environmental courts on corporations, offering theoretical insights and empirical evidence for fostering ecological protection alongside economic development.

Suggested Citation

  • Wang, Chuanfei & Sun, Pu, 2025. "From rules to results: How the ecological rule of law drives corporate pollution reduction," Finance Research Letters, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:finlet:v:79:y:2025:i:c:s1544612325005057
    DOI: 10.1016/j.frl.2025.107242
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    Keywords

    High-quality economic development; Ecological benefit; Pollution emission intensity; Environmental courts; Green investor;
    All these keywords.

    JEL classification:

    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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