Sustainable green financial system perspective of environmental protection investment and the government’s environmental policy or public participation: evidence from Chinese A-share listed companies

Corporate environmental protection investment (EPI) is one of the ways to accelerate green development. This paper develops a theoretical model of EPI focusing on three factors: the government, the public, and the enterprises. It uses data from A-share listed Chinese companies from 2008 to 2014 to analyse the effects of the government environmental policy and public participation on the corporate EPI. Results of this research show that both the environmental regulations issued by the government and the demands put forward by public opinion encourage enterprises to increase investment in environmental protection. Moreover, the government’s green policy efforts and public participation result in synergy in governance. Relevant regulations issued by the government improve the efficiency of actual public participation. However, redundant government intervention is not conducive to increasing corporate investment in environmental protection. According to this research, market-oriented reforms can boost the positive impact of government and public efforts on corporate EPI. In order to improve environmental governance and achieve green development, it is necessary to deepen market-oriented reforms and build a coordinated, complementary, and incentive-compatible governance system that deals with issues, demands, rights, and responsibilities of the government, the public, and enterprises.