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The impact of environmental tax on R&D investment of heavily polluting companies: Incentive or inhibition?

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  • Pan, Xiaozhen
  • Zhang, Nianming

Abstract

The theoretical analysis shows that the environmental tax may have both incentive and inhibition effects on the R&D investment of heavily polluting enterprises. Taking Chinese heavily polluting listed companies from 2012 to 2022 as a sample, this study uses the multi-period DID model to show that environmental tax inhibits the R&D investment of heavily polluting enterprises in China. The inhibition effect mainly occurs in the sub-samples of non-state-owned enterprises and a weak legal environment. China needs further to improve the system design of the environmental tax, strengthen the collection and management of environmental tax, and promote the construction of the external market environment and policy environment of enterprises.

Suggested Citation

  • Pan, Xiaozhen & Zhang, Nianming, 2025. "The impact of environmental tax on R&D investment of heavily polluting companies: Incentive or inhibition?," International Review of Economics & Finance, Elsevier, vol. 97(C).
    • Handle: RePEc:eee:reveco:v:97:y:2025:i:c:s1059056024008189
    DOI: 10.1016/j.iref.2024.103826
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    2. Yuan, Zhihui & Bao, Xianjun, 2025. "Corporate financing constraints and environmental information disclosure hype," International Review of Economics & Finance, Elsevier, vol. 102(C).
    3. Yue Sun & Dengjun Zhang, 2026. "Perceived tax obstacles and corporate environmental activities," Economics Bulletin, AccessEcon, vol. 46(1), pages 133-151.
    4. Luo, Zhenxiang, 2025. "Legal environment and corporate litigation risk: A study based on the perspective of media attention," Finance Research Letters, Elsevier, vol. 85(PE).

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