From contingency to repeat: the concept and measurement of repeated environmental violations in enterprises

As a byproduct of the rapid development of China’s economy, the tradeoff between environmental protection and economic growth has become increasingly prominent. Environmental violations, especially repeated environmental violations (REVs), are becoming an increasing concern. Nevertheless, previous studies mainly empirically analyze single and static environmental violations, and there is still a lack of attention paid to clearly defining REVs as well as clarifying their influence on enterprises. In this study, we introduce the concept of REVs and provide a mathematical measurement framework for quantifying them. Moreover, using a sample of Chinese listed companies, we further investigate the role of enterprises’ ownership type, geographical location and industry type in the relationship between REVs and enterprises’ financial losses. The results show that the average financial loss caused by REVs is significantly higher in state-owned enterprises (SOEs) than in nonstate-owned enterprises (NSOEs) and more intensive in high-pollution than in low-pollution enterprises. Moreover, enterprises operating in eastern China suffer greater losses than those in midwest China. The results also indicate that monetary penalties play a critical role in environmental regulations, while such regulations need to be further improved to address enterprise REVs. This study fills the gaps in the existing research on REVs and sheds light on the importance of environmental protection in developing countries.