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Environmental protection fee-to-tax policy, risk taking, and corporate investment efficiency

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  • Li, Ruoyi
  • Xiao, TiDong
  • Yu, Guangying

Abstract

Based on the implementation background of China's Environmental Protection Tax Law, this study systematically examines the impact and mechanism of the environmental fee-to-tax policy on corporate investment efficiency using panel data of A-share listed companies from 2011 to 2023. The findings reveal that the policy significantly enhances corporate investment efficiency by making environmental costs explicit. It indirectly promotes efficiency improvement by reducing risk-taking levels and increasing innovation investment. The policy effects exhibit significant heterogeneity, with private enterprises and those in the eastern and central regions responding more actively, while state-owned enterprises and those in the western region show weaker effects due to budget soft constraints and differences in enforcement intensity.

Suggested Citation

  • Li, Ruoyi & Xiao, TiDong & Yu, Guangying, 2026. "Environmental protection fee-to-tax policy, risk taking, and corporate investment efficiency," Finance Research Letters, Elsevier, vol. 89(C).
    • Handle: RePEc:eee:finlet:v:89:y:2026:i:c:s1544612325025449
    DOI: 10.1016/j.frl.2025.109295
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