IDEAS home Printed from https://ideas.repec.org/a/wly/jintdv/v37y2025i1p22-50.html
   My bibliography  Save this article

Enterprise environmental performance under China's framework for Central Environmental Protection Inspection: Quasi‐natural experimental evidence

Author

Listed:
  • Xiang Li
  • Hailin Lan
  • Ping Zeng

Abstract

In 2016, China launched the Central Environmental Protection Inspection (CEPI) to address environmental pollution. Using a triple‐difference method with data from China's A‐share listed companies between 2010 and 2019, we find that CEPI significantly improves the environmental performance of firms. The improvements are driven by increased environmental awareness, stricter enforcement and greater investment in environmental protection. Fiscal and environmental decentralization positively reinforce the policy's effectiveness. Regions with high public participation, media attention, and visibility experience greater benefits. This research highlights the importance of combining policy initiatives with active public and media engagement to achieve significant environmental improvements.

Suggested Citation

  • Xiang Li & Hailin Lan & Ping Zeng, 2025. "Enterprise environmental performance under China's framework for Central Environmental Protection Inspection: Quasi‐natural experimental evidence," Journal of International Development, John Wiley & Sons, Ltd., vol. 37(1), pages 22-50, January.
    • Handle: RePEc:wly:jintdv:v:37:y:2025:i:1:p:22-50
    DOI: 10.1002/jid.3948
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/jid.3948
    Download Restriction: no
    File URL: https://libkey.io/10.1002/jid.3948?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
    ---><---

    References listed on IDEAS

    as
    1. Amore, Mario Daniele & Minichilli, Alessandro, 2018. "Local Political Uncertainty, Family Control, and Investment Behavior," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 53(4), pages 1781-1804, August.
    2. Hongshan Ai & Yang Hu & Ke Li, 2021. "Impacts of environmental regulation on firm productivity: evidence from China’s Top 1000 Energy-Consuming Enterprises Program," Applied Economics, Taylor & Francis Journals, vol. 53(7), pages 830-844, February.
    3. Li, Quan & Chen, Yang & Wan, Mengfei, 2023. "The impact of central environmental inspection on institutional ownership: Evidence from Chinese listed firms," Pacific-Basin Finance Journal, Elsevier, vol. 77(C).
    4. Damania, Richard & Fredriksson, Per G. & List, John A., 2003. "Trade liberalization, corruption, and environmental policy formation: theory and evidence," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 490-512, November.
    5. Zhang, Bingbing & Wang, Yuan & Sun, Chuanwang, 2023. "Urban environmental legislation and corporate environmental performance: End governance or process control?," Energy Economics, Elsevier, vol. 118(C).
    6. Zhang, Hua & Xu, Tiantian & Feng, Chao, 2022. "Does public participation promote environmental efficiency? Evidence from a quasi-natural experiment of environmental information disclosure in China," Energy Economics, Elsevier, vol. 108(C).
    7. Lynne Oats & Penelope Tuck, 2019. "Corporate tax avoidance: is tax transparency the solution?," Accounting and Business Research, Taylor & Francis Journals, vol. 49(5), pages 565-583, July.
    8. Erhart, Szilárd, 2022. "Take it with a pinch of salt—ESG rating of stocks and stock indices," International Review of Financial Analysis, Elsevier, vol. 83(C).
    9. Florian Berg & Julian F Kölbel & Roberto Rigobon, 2022. "Aggregate Confusion: The Divergence of ESG Ratings [Corporate social responsibility and firm risk: theory and empirical evidence]," Review of Finance, European Finance Association, vol. 26(6), pages 1315-1344.
    10. David M. Konisky, 2007. "Regulatory Competition and Environmental Enforcement: Is There a Race to the Bottom?," American Journal of Political Science, John Wiley & Sons, vol. 51(4), pages 853-872, October.
    11. Deng, Jiapin & Liu, Qiao, 2024. "Good finance, bad finance, and resource misallocation: Evidence from China," Journal of Banking & Finance, Elsevier, vol. 159(C).
    12. Madhu Khanna & William Rose Q. Anton, 2002. "Corporate Environmental Management: Regulatory and Market-Based Incentives," Land Economics, University of Wisconsin Press, vol. 78(4), pages 539-558.
    13. Quan-Jing Wang & Qiong Shen & Yong Geng & Dan-Yang Li, 2022. "Does Overseas Investment Raise Corporate Environmental Protection? Evidence from Chinese A-List Companies," IJERPH, MDPI, vol. 19(2), pages 1-15, January.
    14. Huynh, Cong Minh & Le, Quoc Nha & Lam, Thi Huong Tra, 2023. "Is air pollution a government failure or a market failure? Global evidence from a multi-dimensional analysis," Energy Policy, Elsevier, vol. 173(C).
    15. Pargal, Sheoli & Wheeler, David, 1996. "Informal Regulation of Industrial Pollution in Developing Countries: Evidence from Indonesia," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1314-1327, December.
    16. Chien-Chiang Lee & Mingli Zeng & Kang Luo, 2022. "The Impact of Green Development on Modernization in China: Evidence from 108 Cities in the Yangtze River Economic Belt," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 58(13), pages 3664-3688, October.
    17. Ruxi Wang & Frank Wijen & Pursey P.M.A.R. Heugens, 2018. "Government's green grip: Multifaceted state influence on corporate environmental actions in China," Strategic Management Journal, Wiley Blackwell, vol. 39(2), pages 403-428, February.
    18. Shi, Xinzheng & Xu, Zhufeng, 2018. "Environmental regulation and firm exports: Evidence from the eleventh Five-Year Plan in China," Journal of Environmental Economics and Management, Elsevier, vol. 89(C), pages 187-200.
    19. Maoyong Cheng & Zhenjun Li & Chen Ma, 2023. "Public governance and corporate innovation: evidence from a quasi-natural event in China," Applied Economics, Taylor & Francis Journals, vol. 55(21), pages 2413-2437, May.
    20. Clarkson, Peter M. & Li, Yue & Richardson, Gordon D. & Vasvari, Florin P., 2008. "Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis," Accounting, Organizations and Society, Elsevier, vol. 33(4-5), pages 303-327.
    21. Erik P. Gilje & Jerome P. Taillard, 2016. "Do Private Firms Invest Differently than Public Firms? Taking Cues from the Natural Gas Industry," Journal of Finance, American Finance Association, vol. 71(4), pages 1733-1778, August.
    22. Bendig, David & Schulz, Colin & Theis, Lukas & Raff, Stefan, 2023. "Digital orientation and environmental performance in times of technological change," Technological Forecasting and Social Change, Elsevier, vol. 188(C).
    23. Lingling Pan & Sheng Yao, 2021. "Does central environmental protection inspection enhance firms’ environmental disclosure? Evidence from China," Growth and Change, Wiley Blackwell, vol. 52(3), pages 1732-1760, September.
    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. Zhang, Hua & Lai, Jie & Kang, Chenyi, 2024. "Green signalling under environmental pressure: Does local government environmental regulatory pressure promote corporate environmental information disclosure?," Economic Analysis and Policy, Elsevier, vol. 83(C), pages 813-844.
    2. Mengxue Ji & Zhenming Wu & Dandan Zhu, 2023. "Environmental Vertical Management and Enterprises’ Performance: Evidence from Water Pollution Reduction in China," Sustainability, MDPI, vol. 15(19), pages 1-17, September.
    3. Zhou, Zhifang & Han, Shangjie & Huang, Zhiying & Cheng, Xu, 2023. "Anti-corruption and corporate pollution mitigation: Evidence from China," Ecological Economics, Elsevier, vol. 208(C).
    4. Galinato, Gregmar I. & Chouinard, Hayley H., 2018. "Strategic interaction and institutional quality determinants of environmental regulations," Resource and Energy Economics, Elsevier, vol. 53(C), pages 114-132.
    5. Copeland, Brian R., 2005. "Policy Endogeneity and the Effects of Trade on the Environment," Agricultural and Resource Economics Review, Cambridge University Press, vol. 34(1), pages 1-15, April.
    6. Feifei Yu & Jiayi Mao & Qing Jiang, 2025. "Accumulate thickly to grow thinly: the U-shaped relationship between digital transformation and corporate carbon performance," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(1), pages 2135-2160, January.
    7. Michaela Rankin & Carolyn Windsor & Dina Wahyuni, 2011. "An investigation of voluntary corporate greenhouse gas emissions reporting in a market governance system," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 24(8), pages 1037-1070, October.
    8. Surender Kumar & Pritika Dua, 2022. "Environmental management practices and financial performance: evidence from large listed Indian enterprises," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 65(1), pages 37-61, January.
    9. Borsuk, Marcin & Eugster, Nicolas & Klein, Paul-Olivier & Kowalewski, Oskar, 2024. "Family firms and carbon emissions," Journal of Corporate Finance, Elsevier, vol. 89(C).
    10. Haiqing Hu & Di Chen & Chun‐Ping Chang & Yin Chu, 2021. "The Political Economy Of Environmental Consequences: A Review Of The Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 35(1), pages 250-306, February.
    11. Cheng, Louis T.W. & Cheong, Tsun Se & Wojewodzki, Michal & Chui, David, 2025. "The effect of ESG divergence on the financial performance of Hong Kong-listed firms: An artificial neural network approach," Research in International Business and Finance, Elsevier, vol. 73(PA).
    12. Lizhi Cui & Yining Ding & Xiangqian Li, 2022. "Environmental Regulation Competition and Carbon Emissions," IJERPH, MDPI, vol. 20(1), pages 1-28, December.
    13. Han Zou, 2024. "Environmental regulation, corporate strategy and trade costs: a regression discontinuity in time design," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(5), pages 12163-12191, May.
    14. Haiquan Wu & Wenli Liao & Zhifang Zhou & Yi Li, 2021. "Can Financial Constraints and Regulatory Distance Reduce Corporate Environmental Irresponsibility?," Sustainability, MDPI, vol. 13(23), pages 1-25, November.
    15. Tsang, Albert & Frost, Tracie & Cao, Huijuan, 2023. "Environmental, Social, and Governance (ESG) disclosure: A literature review," The British Accounting Review, Elsevier, vol. 55(1).
    16. Soh Young In & Young Joon Lee & Robert G. Eccles, 2024. "Looking back and looking forward: A scientometric analysis of the evolution of corporate sustainability research over 47 years," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 2225-2259, May.
    17. Chen, Shiyi & Song, Hong & Wu, Chenyu, 2021. "Human capital investment and firms’ industrial emissions: Evidence and mechanism," Journal of Economic Behavior & Organization, Elsevier, vol. 182(C), pages 162-184.
    18. Mohammed Benlemlih & Çiğdem Vural Yavaş, 2024. "Economic Policy Uncertainty and Climate Change: Evidence from CO2 Emission," Journal of Business Ethics, Springer, vol. 191(3), pages 415-441, May.
    19. Dong, Weijia & Dong, Xinyang & Lv, Xin, 2022. "How does ownership structure affect corporate environmental responsibility? Evidence from the manufacturing sector in China," Energy Economics, Elsevier, vol. 112(C).
    20. Jose García-Quevedo & Effie Kesidou & Ester Martínez-Ros, 2018. "Inter-industry differences in organisational eco-innovation: a panel data study," Working Papers 2018/07, Institut d'Economia de Barcelona (IEB).

    More about this item

    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:wly:jintdv:v:37:y:2025:i:1:p:22-50. 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: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/journal/5102/home .

    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.