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Exploring the Triple Dividend Effect and Threshold Effect of Environmental Protection Tax: Evidence from Chinese Listed Companies

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  • Chenghao Ye

    (Institute of Economics and Management, Ural Federal University Named After the First President of Russia B.N. Yeltsin, Yekaterinburg 620062, Russia)

  • Hongjie Gao

    (Institute of Economics and Management, Ural Federal University Named After the First President of Russia B.N. Yeltsin, Yekaterinburg 620062, Russia)

  • Igor A. Mayburov

    (Institute of Economics and Management, Ural Federal University Named After the First President of Russia B.N. Yeltsin, Yekaterinburg 620062, Russia
    Institute for Research of Social and Economic Changes and Financial Policy, Financial University Under the Government of the Russian Federation, Moscow 125167, Russia)

Abstract

This study uses financial data from 872 Chinese listed companies (2018–2022). It tests the triple dividend effect and threshold effect of China’s environmental protection tax (EPT) using high-dimensional fixed effects models and panel threshold models. We document that (1) EPT creates an environmental dividend for Chinese listed companies. It significantly reduces pollution emissions. A 1-unit tax increase reduces LnTPPE by 2.5%. (2) EPT creates a significant innovation dividend. It forces enterprises to improve the quality of authorized patents. A 1-unit tax increase raises patent technological complexity by 0.79%. (3) EPT creates an economic dividend. It significantly improves firm performance. A 1-unit tax increase raises relative corporate revenue by 38.1%. (4) EPT exerts significant threshold effects on micro-level triple dividend outcomes among Chinese listed companies. A heterogeneity analysis shows significant differences in threshold effects between non-heavily polluting and heavily polluting industries. This study confirms that China’s EPT generates a micro-level triple dividend effect alongside coexisting threshold effects for listed companies. This provides literature references for China to design and implement differentiated policies and offers a quantitative empirical case for implementing globally sustainable EPT strategies.

Suggested Citation

  • Chenghao Ye & Hongjie Gao & Igor A. Mayburov, 2025. "Exploring the Triple Dividend Effect and Threshold Effect of Environmental Protection Tax: Evidence from Chinese Listed Companies," Sustainability, MDPI, vol. 17(15), pages 1-29, August.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:15:p:7038-:d:1716501
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    1. Chenghao Ye & Igor A. Mayburov, 2025. "Does an Environmental Protection Tax Promote or Inhibit the Market Value of Companies? Evidence from Chinese Polluting Companies," Sustainability, MDPI, vol. 17(19), pages 1-26, October.

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