Environmental Protection Tax, Green Management Innovation and Corporate ESG Performance: The Moderating Effect of Media Attention and Top Management Team's Environmental Attention

Based on the organizational legitimacy theory, we examine the Environmental Protection Tax (EPT) Law in China as an exogenous shock to investigate its effects on companies' environmental, social, and governance (ESG) outcomes. Taking China's A‐share listed firms as the sample, a difference‐in‐difference (DID) with multiple time periods model is used for empirical testing. The results indicate that the introduction of EPT can promote the improvement of ESG performance, and this positive effect can be achieved by encouraging companies to implement initiatives for innovation in green management. The research finding shows that the effect of EPT on firms' ESG achievements is more prominent in the context of greater media attention and environmental attention from the senior management team. Moreover, the research conclusions have passed a series of robustness tests. This study not only expands the application of organizational legitimacy theory in corporate sustainable development but also provides a useful reference for improving the environmental regulatory system.