Does environmental regulations promote the green transformation of high polluters?

ABSTRACT

In light of the implementation of the Environmental Protection Tax Law (the EPT Law) in China on 1 January 2018, this paper employs the difference-in-difference model (DID) to empirically investigates how the environmental regulations affects the green transformation of highly polluting firms. The results indicate that the EPT Law has significantly aided in the green transformation of highly polluting firms, with the increasing pressure of environmental legality acting as a partial mediating effect. This paper adds to the research on the economic effects of the environmental regulations and provides new evidence to support the incentive perspective on environmental regulations.

KEYWORDS:

• Environmental regulations
• environmental protection tax law
• green transformation
• environmental lgality pressure

JEL CLASSIFICATION:

• G32
• M21
• M41

Acknowledgments

This study was funded by the National Social Science Foundation, China (20CGL011) and 2020 Graduate Education Innovation Plan of Zhongnan University of Economics and Law, China (202111111).

Disclosure statement

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

Additional information

Funding

This work was supported by the 2020 Graduate Education Innovation Plan of Zhongnan University of Economics and Law, China [202111111]; National Social Science Foundation, China [20CGL011].