The crowding-out effect of the environmental regulation on corporate sustainability
The analysis of the impact of China’s Environmental Protection Tax (EPT) Law on company environmental, social, and corporate governance (ESG) performance is crucial for a more comprehensive understanding of the EPT Law and to improve corporate practices. Using a difference-in-differences (DID) model...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Frontiers Media S.A.
2024-01-01
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| Series: | Frontiers in Environmental Science |
| Subjects: | |
| Online Access: | https://www.frontiersin.org/articles/10.3389/fenvs.2023.1273278/full |
| _version_ | 1827380065850097664 |
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| author | Ke Yuan Bangzheng Wu |
| author_facet | Ke Yuan Bangzheng Wu |
| author_sort | Ke Yuan |
| collection | DOAJ |
| description | The analysis of the impact of China’s Environmental Protection Tax (EPT) Law on company environmental, social, and corporate governance (ESG) performance is crucial for a more comprehensive understanding of the EPT Law and to improve corporate practices. Using a difference-in-differences (DID) model with a research sample of 7,055 listed firms in China from 2012 to 2020, we found that the EPT Law significantly improved firms’ overall ESG performance. However, this improvement was mainly driven by significant increases in the environmental (E) score. In contrast, the social (S) score declined significantly after the implementation of the EPT Law, indicating a trade-off between environmental regulation and social responsibility. Further analysis also reveals that the increase in production costs, which led to a decrease in employment and wages, is responsible for the crowding-out of social responsibility. This study not only enhances our understanding of the impacts of environmental regulations on companies but also offers guidelines for policymakers to consider the negative externality of policies, which could serve as a “double-edged sword.” |
| first_indexed | 2024-03-08T13:27:16Z |
| format | Article |
| id | doaj.art-1eee5865588946bba6007f12e6dc3da3 |
| institution | Directory Open Access Journal |
| issn | 2296-665X |
| language | English |
| last_indexed | 2024-03-08T13:27:16Z |
| publishDate | 2024-01-01 |
| publisher | Frontiers Media S.A. |
| record_format | Article |
| series | Frontiers in Environmental Science |
| spelling | doaj.art-1eee5865588946bba6007f12e6dc3da32024-01-17T13:07:03ZengFrontiers Media S.A.Frontiers in Environmental Science2296-665X2024-01-011110.3389/fenvs.2023.12732781273278The crowding-out effect of the environmental regulation on corporate sustainabilityKe Yuan0Bangzheng Wu1School of Labor and Human Resources, Renmin University of China, Beijing, ChinaSchool of Management, Hebei Finance University, Baoding, Hebei, ChinaThe analysis of the impact of China’s Environmental Protection Tax (EPT) Law on company environmental, social, and corporate governance (ESG) performance is crucial for a more comprehensive understanding of the EPT Law and to improve corporate practices. Using a difference-in-differences (DID) model with a research sample of 7,055 listed firms in China from 2012 to 2020, we found that the EPT Law significantly improved firms’ overall ESG performance. However, this improvement was mainly driven by significant increases in the environmental (E) score. In contrast, the social (S) score declined significantly after the implementation of the EPT Law, indicating a trade-off between environmental regulation and social responsibility. Further analysis also reveals that the increase in production costs, which led to a decrease in employment and wages, is responsible for the crowding-out of social responsibility. This study not only enhances our understanding of the impacts of environmental regulations on companies but also offers guidelines for policymakers to consider the negative externality of policies, which could serve as a “double-edged sword.”https://www.frontiersin.org/articles/10.3389/fenvs.2023.1273278/fullESGenvironmental protection taxenvironmental performancesocial performancecrowding-out effectemployment |
| spellingShingle | Ke Yuan Bangzheng Wu The crowding-out effect of the environmental regulation on corporate sustainability Frontiers in Environmental Science ESG environmental protection tax environmental performance social performance crowding-out effect employment |
| title | The crowding-out effect of the environmental regulation on corporate sustainability |
| title_full | The crowding-out effect of the environmental regulation on corporate sustainability |
| title_fullStr | The crowding-out effect of the environmental regulation on corporate sustainability |
| title_full_unstemmed | The crowding-out effect of the environmental regulation on corporate sustainability |
| title_short | The crowding-out effect of the environmental regulation on corporate sustainability |
| title_sort | crowding out effect of the environmental regulation on corporate sustainability |
| topic | ESG environmental protection tax environmental performance social performance crowding-out effect employment |
| url | https://www.frontiersin.org/articles/10.3389/fenvs.2023.1273278/full |
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