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Sustainable Growth: Unveiling the Impact of Government Attention on Corporate Environmental Performance

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  • Xian Zheng
  • Zizhen Huang
  • Kangqi Jiang
  • Yuting Dong

Abstract

With the ongoing development of ecological civilization and advancing state governance, governments focus increasingly on environmental issues to foster low‐carbon development. We define government environmental attention (GEA) by aggregating and analyzing textual data extracted from government work reports from 2008 to 2020, using web scraping and expanding the environmental vocabulary with the Word2Vec model. This study examines the impact of GEA on corporate environmental performance (CEP), using datasets from A‐share listed corporations in Shanghai and Shenzhen. Our findings reveal a significant positive relationship between GEA and CEP, which remains robust after addressing endogeneity concerns and conducting various sensitivity tests. Mechanistic analysis indicates that GEA enhances CEP by strengthening environmental penalties, directing financial resources toward less polluting firms, and raising managerial green awareness. Heterogeneity analysis suggests that GEA's positive effects on CEP are more pronounced in cities with extensive digital government procurement. Further analysis shows that the capital market responds positively to GEA, enhancing stock liquidity, institutional investor holdings, long‐term investor holdings, stock returns, and overall firm value. These findings provide critical insights for policymakers to foster sustainable corporate practices and long‐term development.

Suggested Citation

  • Xian Zheng & Zizhen Huang & Kangqi Jiang & Yuting Dong, 2026. "Sustainable Growth: Unveiling the Impact of Government Attention on Corporate Environmental Performance," Business Ethics, the Environment & Responsibility, John Wiley & Sons, Ltd., vol. 35(1), pages 501-524, January.
    • Handle: RePEc:wly:buseth:v:35:y:2026:i:1:p:501-524
    DOI: 10.1111/beer.12800
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