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Environmental health management and firm productivity: Evidence from China

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  • Wan, Luo
  • Xie, Xiangjie
  • Chen, Hongmin

Abstract

The impact of environmental health management on firm’s total factor productivity (TFP) was investigated in this study. The Environmental Health Management Pilot was released by China’s Ministry of Ecology and Environment in 2018. We use a difference-in-differences approach to reveal that the Environmental Health Management Pilot lowers the TFP of firms, and that this effect is more pronounced among firms with better environmental management practice and in regions characterized by heightened public environmental concern, greater local government environmental spending, and more intense bank competition. Further, the mechanism tests demonstrate that the Environmental Health Management Pilot enhances the green awareness of executives, increase firms’ environmental investment and green innovation, but squeezes out corporate investment on R&D and capital, and reduces the investment efficiency of firm. Finally, we find that the Environmental Health Management Pilot reduces bank loans of firms by reducing firm TFP. Overall, this study enriches the literature of the consequences of environmental health management and the driving factors of firm TFP.

Suggested Citation

  • Wan, Luo & Xie, Xiangjie & Chen, Hongmin, 2026. "Environmental health management and firm productivity: Evidence from China," Finance Research Letters, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:finlet:v:90:y:2026:i:c:s1544612325025942
    DOI: 10.1016/j.frl.2025.109345
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