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The impact of environmental protection tax law on corporate innovation

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  • Liu, Jiayin

Abstract

This paper examines the intrinsic relationship between environmental protection tax and corporate innovation. Employing a difference-in-differences approach complemented by case study analysis, we systematically investigate how environmental tax policies affect innovation behaviors across different firm types. The results demonstrate that environmental protection tax significantly promotes corporate innovation. The tax reform stimulates innovation output by enhancing firms' ESG performance, with state-owned enterprises and large firms exhibiting more pronounced innovation responses. These findings provide empirical evidence for policymakers to refine environmental taxation systems.

Suggested Citation

  • Liu, Jiayin, 2025. "The impact of environmental protection tax law on corporate innovation," Finance Research Letters, Elsevier, vol. 86(PC).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pc:s154461232501788x
    DOI: 10.1016/j.frl.2025.108534
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    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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