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Low-carbon governance, fiscal decentralization, and enterprise green development: Evidence from China

Author

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  • Shihai Liu
  • Jinsong Kuang
  • Dezhi Ding
  • Dag Øivind Madsen
  • Xiaofei Shi
  • Xianyang Fan

Abstract

Simultaneously achieving economic development and environmental protection is a shared global challenge. While the positive effect of environmental regulations on protecting the environment has been widely recognized, the attention paid to low-carbon governance and corporate green transformation remains insufficient. Based on the two-stage least square regression model (2SLS) of instrumental variables, this paper utilizes panel data from China to identify the influence mechanism of government low-carbon governance on enterprise green development. It explores the effect of low-carbon governance on enterprise green development from the perspective of fiscal decentralization. The findings show that (1) Low-carbon governance significantly promotes corporate green development, primarily through improving industrial structure and technological innovation; (2) Low-carbon governance notably promotes the green development of private enterprises but has little effect on state-owned enterprises. There are also geographical differences, and the results are better in Eastern China than in the Central and Western parts of China; (3) Fiscal decentralization at both central and local levels inhibits the effect of low-carbon governance on driving corporate green development by causing a mismatch of human resources. Therefore, to promote corporate green development, low-carbon governance must prioritize green development, actively guide industrial structural upgrading and enterprise technological innovation, implement differentiated low-carbon governance measures tailored to different ownership enterprises, and optimize the assessment indicators for fiscal decentralization. This paper helps deepen the understanding of the relationship between government low-carbon governance and enterprise green development in developing countries. It can be used as a reference for government departments to formulate relevant policies.

Suggested Citation

  • Shihai Liu & Jinsong Kuang & Dezhi Ding & Dag Øivind Madsen & Xiaofei Shi & Xianyang Fan, 2024. "Low-carbon governance, fiscal decentralization, and enterprise green development: Evidence from China," PLOS ONE, Public Library of Science, vol. 19(3), pages 1-27, March.
    • Handle: RePEc:plo:pone00:0296490
    DOI: 10.1371/journal.pone.0296490
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