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The Impact of Free Trade Zones on Corporate Sustainability Performance: An Empirical Examination from the Dual Perspectives of Financial and Environmental Performance

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  • Yu Wang

    (School of Economics, Shandong University, Jinan 250061, China)

  • Qingfeng Kong

    (School of Economics, Shandong University, Jinan 250061, China)

Abstract

As a “testing ground” for a new round of institutional innovation, China’s pilot free trade zones (FTZs) have created favorable development conditions for listed companies and significantly influenced their sustainability performance. Utilizing data from Shanghai and Shenzhen A-share listed companies from 2010 to 2022, this study uses the establishment of FTZs as a “quasi-natural experiment” and measures corporate sustainability performance by combining financial and environmental performance. A PSM-DID model is constructed to explore the impact of FTZ construction on corporate sustainability performance. The findings are as follows: (1) The establishment of FTZs significantly enhances both the financial and environmental performance of companies. (2) FTZs promote corporate sustainability performance by reducing transaction costs and improving corporate innovation levels. (3) The establishment of FTZs has a significantly positive impact on the sustainability performance of companies in highly competitive industries, non-labor-intensive industries, high-tech enterprises, and large-scale companies. This study reveals the impact and transmission mechanisms of FTZs on corporate sustainability performance, providing new empirical evidence for the future direction of corporate sustainable development in China.

Suggested Citation

  • Yu Wang & Qingfeng Kong, 2024. "The Impact of Free Trade Zones on Corporate Sustainability Performance: An Empirical Examination from the Dual Perspectives of Financial and Environmental Performance," Sustainability, MDPI, vol. 16(21), pages 1-21, October.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:21:p:9376-:d:1508955
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    References listed on IDEAS

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