IDEAS home Printed from https://ideas.repec.org/a/spr/empeco/v68y2025i5d10.1007_s00181-024-02701-0.html
   My bibliography  Save this article

How does fiscal pressure affect corporate green transformation? A quasi-natural experiment based on education authority reform

Author

Listed:
  • Song Nie

    (Nankai University)

Abstract

Recently, as problems related to local government debt and land fiscal revenue have become increasingly serious, Chinese local governments have been facing severe fiscal pressures. The fiscal issue will change the government behavior and affect the regional performance. However, the research on whether fiscal pressure affects corporate green transformation is still scarce. To cover the research gap on the micro-impact of fiscal pressure, we consider the “Education Authority Reform” as a quasi-experiment and adopt the continuous DID method to examine the effect of fiscal pressure on corporate green transformation. We find that fiscal pressure generated by the education authority reform significantly exerts negative impacts on corporate green transformation. This negative effect acts through weakening green innovation, adding financing constraints, increasing tax burden, and loosening environmental regulation. The conclusions offer theoretical support for effective government fiscal governance and hold significant practical implications for promoting corporate green transformation in emerging market countries.

Suggested Citation

  • Song Nie, 2025. "How does fiscal pressure affect corporate green transformation? A quasi-natural experiment based on education authority reform," Empirical Economics, Springer, vol. 68(5), pages 2357-2382, May.
    • Handle: RePEc:spr:empeco:v:68:y:2025:i:5:d:10.1007_s00181-024-02701-0
    DOI: 10.1007/s00181-024-02701-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s00181-024-02701-0
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s00181-024-02701-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Nathan Nunn & Nancy Qian, 2011. "The Potato's Contribution to Population and Urbanization: Evidence From A Historical Experiment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(2), pages 593-650.
    2. Wang, Zhen & Chu, Erming & Hao, Yukai, 2024. "Towards sustainable development: How does ESG performance promotes corporate green transformation," International Review of Financial Analysis, Elsevier, vol. 91(C).
    3. Rehman, Shafique Ur & Kraus, Sascha & Shah, Syed Asim & Khanin, Dmitry & Mahto, Raj V., 2021. "Analyzing the relationship between green innovation and environmental performance in large manufacturing firms," Technological Forecasting and Social Change, Elsevier, vol. 163(C).
    4. Meng, Ming & Qu, Danlei, 2022. "Understanding the green energy efficiencies of provinces in China: A Super-SBM and GML analysis," Energy, Elsevier, vol. 239(PA).
    5. Ji, Qiang & Nie, Song, 2024. "How does local government fiscal pressure affect corporate ESG performance?," Finance Research Letters, Elsevier, vol. 64(C).
    6. Yutao Chen & Jian Feng, 2019. "Do corporate green investments improve environmental performance? Evidence from the perspective of efficiency," China Journal of Accounting Studies, Taylor & Francis Journals, vol. 7(1), pages 62-92, January.
    7. Xia, Li & Gao, Shuo & Wei, Jiuchang & Ding, Qiying, 2022. "Government subsidy and corporate green innovation - Does board governance play a role?," Energy Policy, Elsevier, vol. 161(C).
    8. Wang, Zhen & Chu, Erming & Hao, Yukai, 2024. "Retraction notice to “ Towards sustainable development: How does ESG performance promotes corporate green transformation”," International Review of Financial Analysis, Elsevier, vol. 95(PC).
    9. Qu, Xi & Xu, Zhiwei & Yu, Jinxiang & Zhu, Jun, 2023. "Understanding local government debt in China: A regional competition perspective," Regional Science and Urban Economics, Elsevier, vol. 98(C).
    10. Wei Tang & Xingzhu Zhao & Shengbao Zhai & Lei Cao, 2023. "Local government debt and corporate tax burden: A perspective based on the trade-off of government tax collection and management," PLOS ONE, Public Library of Science, vol. 18(7), pages 1-23, July.
    11. Dong-hyun Oh, 2010. "A global Malmquist-Luenberger productivity index," Journal of Productivity Analysis, Springer, vol. 34(3), pages 183-197, December.
    12. Jun Liu & Feng Liu, 2013. "Fiscal centralization, government control and corporate tax burden: Evidence from China," China Journal of Accounting Studies, Taylor & Francis Journals, vol. 1(3-4), pages 168-189, December.
    13. Fei Peng & Shibiao Zhou & Tao Ding & Huaqing Wu, 2023. "Impact of fiscal expenditure stress on green transformation risk: evidence from China education authority reform," Economic Change and Restructuring, Springer, vol. 56(6), pages 4565-4601, December.
    14. Sun, Liyang & Abraham, Sarah, 2021. "Estimating dynamic treatment effects in event studies with heterogeneous treatment effects," Journal of Econometrics, Elsevier, vol. 225(2), pages 175-199.
    15. Min Jiang & Euijune Kim & Youngjin Woo, 2020. "The Relationship between Economic Growth and Air Pollution—A Regional Comparison between China and South Korea," IJERPH, MDPI, vol. 17(8), pages 1-20, April.
    16. Chen, Haiqiang & Lin, Zhe, 2024. "Local fiscal pressure and shadow banking activities of nonfinancial enterprises–A story of government intervention," Finance Research Letters, Elsevier, vol. 62(PB).
    17. Xue, Mingfu & Razzaq, Asif & Afshan, Sahar & Yang, Xiaodong, 2023. "Fiscal pressure and carbon intensity: A quasi-natural experiment based on education authority reform," Energy Economics, Elsevier, vol. 126(C).
    18. Naqvi, Bushra & Rizvi, Syed Kumail Abbas & Mirza, Nawazish & Umar, Muhammad, 2023. "Financial market development: A potentiating policy choice for the green transition in G7 economies," International Review of Financial Analysis, Elsevier, vol. 87(C).
    19. Ameer, Farah & Khan, Naveed R., 2023. "Green entrepreneurial orientation and corporate environmental performance: A systematic literature review," European Management Journal, Elsevier, vol. 41(5), pages 755-778.
    20. Xiaosan Zhang & Xiaojie Hu & Fang Wu, 2022. "Fiscal Decentralization, Taxation Efforts and Corporate Green Technology Innovation in China Based on Moderating and Heterogeneity Effects," Sustainability, MDPI, vol. 14(22), pages 1-21, November.
    21. Shiyu Lu & Bo Cheng, 2023. "Does environmental regulation affect firms' ESG performance? Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(4), pages 2004-2009, June.
    22. Chen, Wen & Zhu, Yufeng & He, Zehui & Yang, Yang, 2022. "The effect of local government debt on green innovation: Evidence from Chinese listed companies," Pacific-Basin Finance Journal, Elsevier, vol. 73(C).
    23. Tan, Xiujie & Liu, Gufeng & Cheng, Si, 2024. "How does ESG performance affect green transformation of resource-based enterprises: Evidence from Chinese listed enterprises," Resources Policy, Elsevier, vol. 89(C).
    24. Nie, Song & Liu, Junxian & Zeng, Gang & You, Jiyuan, 2023. "Local government debt pressure and corporate ESG performance: Empirical evidence from China," Finance Research Letters, Elsevier, vol. 58(PB).
    25. Charles J. Hadlock & Joshua R. Pierce, 2010. "New Evidence on Measuring Financial Constraints: Moving Beyond the KZ Index," The Review of Financial Studies, Society for Financial Studies, vol. 23(5), pages 1909-1940.
    26. Bai, Xiao & Wang, Kuan-Ting & Tran, Trung Kien & Sadiq, Muhammad & Trung, Lam Minh & Khudoykulov, Khurshid, 2022. "Measuring China’s green economic recovery and energy environment sustainability: Econometric analysis of sustainable development goals," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 768-779.
    27. Shu, Hao & Tan, Weiqiang, 2023. "Does carbon control policy risk affect corporate ESG performance?," Economic Modelling, Elsevier, vol. 120(C).
    28. Cheng, Yudan & Jia, Shanghui & Meng, Huan, 2022. "Fiscal policy choices of local governments in China: Land finance or local government debt?," International Review of Economics & Finance, Elsevier, vol. 80(C), pages 294-308.
    29. Junhong Bai & Jiayu Lu & Sijia Li, 2019. "Fiscal Pressure, Tax Competition and Environmental Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(2), pages 431-447, June.
    30. Yousha Liang & Kang Shi & Lisheng Wang & Juanyi Xu, 2017. "Local Government Debt and Firm Leverage: Evidence from China," Asian Economic Policy Review, Japan Center for Economic Research, vol. 12(2), pages 210-232, July.
    31. Qiwen Dai & Huihua Huang & Xiaoqi Zhang & Yumin Su & Cheyuan Liu & Qiangyi Li, 2022. "Mediation Effect of Corporate Tax Burden and the Relationship between Environmental Regulation and Firm Performance," IJERPH, MDPI, vol. 19(22), pages 1-23, November.
    32. Abdallah, Abed Al-Nasser & Ismail, Ahmad K., 2017. "Corporate governance practices, ownership structure, and corporate performance in the GCC countries," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 46(C), pages 98-115.
    33. Yu Lu & Rui Liu & Yuhe Cao & Yuhan Li, 2023. "Tax Burden and Corporate Investment Efficiency," Sustainability, MDPI, vol. 15(3), pages 1-16, January.
    34. Nie, Song, 2024. "Does intellectual property rights protection matter for low-carbon transition? The role of institutional incentives," Economic Modelling, Elsevier, vol. 140(C).
    35. Xu Zhang & Tianchu Feng & Chengjun Wang & Chaozhu Li, 2023. "Local Fiscal Pressure and Public Health: Evidence from China," IJERPH, MDPI, vol. 20(6), pages 1-17, March.
    36. Feng Dong & Chang Qin & Xiaoyun Zhang & Xu Zhao & Yuling Pan & Yujin Gao & Jiao Zhu & Yangfan Li, 2021. "Towards Carbon Neutrality: The Impact of Renewable Energy Development on Carbon Emission Efficiency," IJERPH, MDPI, vol. 18(24), pages 1-23, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nie, Song & Zeng, Gang & Zhang, Xu & Guo, Qiaozhe, 2024. "Does local government debt pressure hamper green transition? Evidence from China," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 1185-1201.
    2. Xiong, Jiacai & Huang, Ling & Wang, Xin & Bai, Martin & Qin, Yafeng, 2024. "Local government fiscal stress and regional entrepreneurship: Evidence from a natural experiment in China," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 177-193.
    3. Chen, Haiqiang & Lin, Zhe, 2025. "Local fiscal pressure and new firm entry," International Review of Financial Analysis, Elsevier, vol. 99(C).
    4. Zhang, Hua & Lai, Jie, 2024. "Greening through ESG: Do ESG ratings improve corporate environmental performance in China?," International Review of Economics & Finance, Elsevier, vol. 96(PC).
    5. Nie, Song & Zeng, Gang & Zhang, Hongying & Ji, Jianwen, 2024. "The local government fiscal pressure's effect on green total factor productivity: Exploring mechanisms from the perspective of government behavior," International Review of Economics & Finance, Elsevier, vol. 96(PC).
    6. Hai Xie & Weikun Zhang & Hanyuan Liang, 2023. "Can Local Government Debt Decrease the Pollution Emission of Enterprises?—Evidence from China’s Industrial Enterprises," Sustainability, MDPI, vol. 15(11), pages 1-20, June.
    7. Zhang-Hangjian, Chen & Mengqing, Xu & Fei, Ren & Xiong, Xiong, 2025. "SDG performance and stock returns: Fresh insights from China," Journal of International Money and Finance, Elsevier, vol. 152(C).
    8. Zhu, Jun & Xu, Haokun & Zhang, Yue, 2022. "Local government debt and firm productivity: Evidence from China," Research in International Business and Finance, Elsevier, vol. 63(C).
    9. Kang, Dan & Xu, Jiahao & Tong, Qiye & Li, Jiayan, 2025. "CEO financial background and corporate financialization," Finance Research Letters, Elsevier, vol. 71(C).
    10. Chu, Zhongzhu & Zhang, Qiyuan & Tan, Weijie & Chen, Pengyu, 2024. "Assessing the impact of climate policy stringency on corporate energy innovation: Insights from China," Energy Economics, Elsevier, vol. 140(C).
    11. Liu, Ying & Huang, Hongyun & Mbanyele, William & Wei, Zhixing & Li, Xin, 2025. "How does green industrial policy affect corporate green innovation? Evidence from the green factory identification in China," Energy Economics, Elsevier, vol. 141(C).
    12. Yao, Meijie & Chen, Wei, 2025. "Enhancing ESG performance through public fund shareholding," Finance Research Letters, Elsevier, vol. 76(C).
    13. Siqian Chen & Xin Leng & Kun Luo, 2024. "Supply chain digitalization and corporate ESG performance," American Journal of Economics and Sociology, Wiley Blackwell, vol. 83(4), pages 855-881, September.
    14. Liu, Xiaojing & Huang, Ningren & Su, Wunhong & Zhou, Haiyan, 2024. "Green innovation and corporate ESG performance: Evidence from Chinese listed companies," International Review of Economics & Finance, Elsevier, vol. 95(C).
    15. Ting Dai, 2025. "Delving into the green growth dilemma and ESG investing in Southeast Asia," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-8, December.
    16. Nie, Song & Liu, Junxian & Zeng, Gang & You, Jiyuan, 2023. "Local government debt pressure and corporate ESG performance: Empirical evidence from China," Finance Research Letters, Elsevier, vol. 58(PB).
    17. Jiang, Yichi & Zhang, Xuanyue & Yao, Shujie, 2025. "On ESG and corporate employment decision: Evidence from Chinese listed firms in 2009–2022," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 854-869.
    18. Zhonghua Cheng & Minghui Zhao, 2025. "ESG performance and green transformation of industrial corporates," Economic Change and Restructuring, Springer, vol. 58(5), pages 1-33, October.
    19. Shao, Wenbo & Chen, Yufan & Zhu, Huan, 2025. "Does the “Braking” of China's land finance facilitate economic “Shift Gears”? Evidence from investment decisions of real firms," Structural Change and Economic Dynamics, Elsevier, vol. 73(C), pages 223-237.
    20. Xiong, Jiacai & Huang, Ling & Yang, Zelin & Wang, Xin, 2024. "The impact of local government debt on entrepreneurship: Evidence from a quasi-natural experiment of local debt governance reform," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 501-519.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:empeco:v:68:y:2025:i:5:d:10.1007_s00181-024-02701-0. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.