Do political connections foster or hamper firm environmental investment?

Figures & data

Figure 1. The research framework.

Source: The authors.

Table 1. Measurement of key variables.

Variable	Calculating method/data meaning
EI_1	The logarithm of annual environmental investment amount
EI_2	Firm annual investment on environmental protection/revenue
EI_3	Dummy. Equaling to zero if the firm has no investment on environmental protection.
Pc_1	Dummy. Equaling to one if the entrepreneur has working experience in government or state-owned enterprises before start-up
Pc_2	Dummy. Equaling to one if the entrepreneur is a member of the National People's Congress (NPC) or Chinese People's Political Consultative Conference (CPPCC)
Regu	Number of administrative fine cases/GDP (provincial level)
Inno	R&D expenditure/revenue
Bothpc	Dummy. Equaling to one if the entrepreneur has both ascribed and achieved political connection simultaneously
Age	Entrepreneur age
Gender	Dummy. Equaling to zero if the entrepreneur is female.
Edu	Ranging from 1 to 6 (1 = primary school, 2 = secondary school, 3 = high school, 4 = college, 5 = university, 6 = postgraduate)
Fage	Year of survey-year of founding
Fsize	The logarithm of firm revenue
ROS	Profit/revenue
Export	Dummy. Equalling to one if the firm exports products or services to other countries
Sgm	Dummy. Equaling to one if the firm has set shareholder general meeting
Dboard	Dummy. Equaling to one if the firm has a board of directors
Sboard	Dummy. Equaling to one if the firm has a board of supervisors
Ind	Dummy. Equalling to one if the firm is in manufacturing industries
Year	Year of survey
Region	Classified as Eastern, Western, Middle and North-Eastern region

Source: The authors.

Table 2. Descriptive statistics of major variables.

Variables	Obs	Mean	Std.Dev.	Min	Max
EI_1	8838	2.823	4.601	0	18.20
EI_2	8838	0.003	0.012	0	0.106
EI_3	8838	0.360	0.480	0	1
Pc_1	8838	0.596	0.491	0	1
Pc_2	8838	0.500	0.500	0	1
Regu	8838	0.320	0.388	0.005	2.451
Inno	8838	0.016	0.048	0	0.474
Bothpc	8838	0.319	0.466	0	1
Age	8838	44.290	8.203	24	67
Gender	8838	0.865	0.341	0	1
Edu	8838	3.413	1.181	1	6
Fage	8838	7.804	4.756	1	27
Fsize	8838	7.057	2.174	0.095	21.98
ROS	8838	0.076	0.160	−0.705	0.800
Export	8838	0.157	0.364	0	1
Sgm	8838	0.598	0.490	0	1
Dboard	8838	0.591	0.492	0	1
Sboard	8838	0.340	0.474	0	1
Ind	8838	0.445	0.497	0	1

Source: The authors.

Table 3. The regression results of environmental investment on political connection.

	M1	M2	M3	M4	M5	M6	M7	M8	M9
	EI_1 (Tobit model)			EI_2 (Tobit model)			EI_3 (Logit model)
Bothpc	1.964***	0.040	0.035	0.055***	−0.005	0.000	0.370***	−0.021	−0.060
	(4.08)	(0.10)	(0.06)	(4.25)	(−0.51)	(0.01)	(3.69)	(−0.25)	(−0.51)
Age	0.017	0.013	0.013	0.000	0.000	0.000	0.003	0.002	0.002
	(1.04)	(0.79)	(0.79)	(0.86)	(0.54)	(0.60)	(0.92)	(0.74)	(0.65)
Gender	1.410***	1.348***	1.348***	0.030**	0.028**	0.028**	0.271***	0.258***	0.257***
	(3.89)	(3.63)	(3.66)	(3.13)	(2.89)	(2.91)	(3.83)	(3.54)	(3.55)
Edu	−0.114	−0.111	−0.111	−0.002	−0.002	−0.002	−0.032	−0.030	−0.030
	(−0.90)	(−0.88)	(−0.88)	(−0.52)	(−0.46)	(−0.48)	(−1.06)	(−0.99)	(−0.98)
Fage	0.002	−0.019	−0.019	−0.001	−0.001	−0.001	0.007	0.002	0.002
	(0.07)	(−0.58)	(−0.58)	(−0.79)	(−1.50)	(−1.49)	(0.96)	(0.23)	(0.22)
Fsize	1.347***	1.270***	1.270***	0.012***	0.010***	0.010***	0.249***	0.232***	0.232***
	(14.48)	(13.50)	(13.69)	(4.91)	(3.87)	(3.92)	(13.86)	(13.09)	(13.29)
ROS	6.462***	6.210***	6.210***	0.191***	0.184***	0.184***	1.440***	1.390***	1.389***
	(7.75)	(7.43)	(7.43)	(6.21)	(5.87)	(5.86)	(7.60)	(7.44)	(7.44)
Export	2.268***	2.281***	2.281***	0.038***	0.038***	0.038***	0.512***	0.516***	0.517***
	(4.91)	(4.96)	(4.98)	(3.44)	(3.51)	(3.52)	(5.13)	(5.18)	(5.20)
Sgm	−1.272***	−1.217***	−1.217***	−0.035***	−0.033***	−0.033***	−0.270***	−0.259***	−0.259***
	(−5.39)	(−5.34)	(−5.36)	(−4.29)	(−4.22)	(−4.22)	(−4.72)	(−4.69)	(−4.70)
Dboard	0.480**	0.450*	0.450*	0.026***	0.025***	0.025***	0.098*	0.092*	0.091*
	(2.58)	(2.43)	(2.44)	(4.25)	(4.12)	(4.17)	(2.43)	(2.26)	(2.25)
Sboard	0.706*	0.682*	0.682*	0.023**	0.022**	0.023**	0.129*	0.127*	0.126*
	(2.37)	(2.33)	(2.31)	(2.67)	(2.61)	(2.60)	(1.98)	(2.01)	(1.99)
Ind	3.927***	3.932***	3.932***	0.087***	0.087***	0.087***	0.829***	0.834***	0.834***
	(11.61)	(11.74)	(11.74)	(8.43)	(8.67)	(8.66)	(13.20)	(13.58)	(13.65)
Pc_1	−1.041*		0.006	−0.035**		−0.005	−0.188*		0.041
	(−2.51)		(0.01)	(−3.10)		(−0.44)	(−2.12)		(0.49)
Pc_2		2.077***	2.080***		0.062***	0.059***		0.439***	0.462***
		(4.64)	(4.65)		(4.79)	(4.01)		(4.09)	(4.23)
Year	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Region	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Constant	−16.117***	−16.194***	−16.196***	−0.345***	−0.348***	−0.346***	−3.483***	−3.493***	−3.504***
	(−10.39)	(−10.86)	(−10.62)	(−10.85)	(−10.92)	(−10.90)	(−12.41)	(−12.84)	(−12.70)
Obs.	8838	8838	8838	8838	8838	8838	8838	8838	8838
Pseudo R^2	0.060	0.061	0.061	0.144	0.151	0.151	0.125	0.128	0.128
F/Chi^2	117.664	122.684	127.731	28.540	27.167	37.051	1817.286	3521.778	3898.089

Notes: t statistics in parentheses;

* p < 0.05,

** p < 0.01,

*** p < 0.001.

Source: The authors.

Table 4. The regression results by including the moderating effect of environmental regulation.

	M1	M2	M3	M4	M5	M6	M7	M8	M9
	EI_1 (Tobit model)			EI_2 (Tobit model)			EI_3 (Logit model)
Bothpc	1.957***	0.043	−0.016	0.055***	−0.005	−0.001	0.372***	−0.020	−0.071
	(4.20)	(0.11)	(−0.03)	(4.27)	(−0.52)	(−0.05)	(3.78)	(−0.23)	(−0.62)
Age	0.017	0.013	0.013	0.000	0.000	0.000	0.003	0.003	0.002
	(1.04)	(0.85)	(0.84)	(0.86)	(0.58)	(0.63)	(0.94)	(0.84)	(0.74)
Gender	1.396***	1.350***	1.332***	0.030**	0.028**	0.028**	0.269***	0.260***	0.255***
	(3.88)	(3.64)	(3.62)	(3.09)	(2.88)	(2.86)	(3.81)	(3.56)	(3.52)
Edu	−0.114	−0.114	−0.113	−0.002	−0.002	−0.002	−0.031	−0.030	−0.030
	(−0.92)	(−0.91)	(−0.90)	(−0.52)	(−0.47)	(−0.49)	(−1.05)	(−0.99)	(−0.97)
Fage	0.002	−0.020	−0.021	−0.001	−0.001	−0.001	0.006	0.002	0.001
	(0.07)	(−0.60)	(−0.64)	(−0.78)	(−1.53)	(−1.54)	(0.96)	(0.22)	(0.17)
Fsize	1.338***	1.269***	1.268***	0.012***	0.010***	0.010***	0.248***	0.233***	0.233***
	(14.28)	(13.76)	(13.82)	(4.86)	(3.92)	(3.96)	(13.67)	(13.27)	(13.33)
ROS	6.441***	6.200***	6.192***	0.191***	0.184***	0.184***	1.442***	1.393***	1.394***
	(7.75)	(7.27)	(7.34)	(6.15)	(5.86)	(5.85)	(7.66)	(7.29)	(7.36)
Export	2.256***	2.279***	2.286***	0.038***	0.039***	0.039***	0.511***	0.517***	0.520***
	(4.87)	(4.91)	(4.96)	(3.41)	(3.47)	(3.48)	(5.12)	(5.09)	(5.16)
Sgm	−1.268***	−1.217***	−1.214***	−0.035***	−0.033***	−0.033***	−0.269***	−0.259***	−0.258***
	(−5.38)	(−5.41)	(−5.39)	(−4.31)	(−4.24)	(−4.24)	(−4.68)	(−4.71)	(−4.66)
Dboard	0.478*	0.458*	0.455*	0.026***	0.025***	0.025***	0.098*	0.093*	0.093*
	(2.52)	(2.43)	(2.41)	(4.27)	(4.13)	(4.19)	(2.39)	(2.28)	(2.25)
Sboard	0.692*	0.662*	0.656*	0.023**	0.022**	0.022**	0.125	0.124*	0.121
	(2.34)	(2.29)	(2.27)	(2.66)	(2.61)	(2.60)	(1.95)	(1.98)	(1.94)
Ind	3.870***	3.899***	3.901***	0.087***	0.087***	0.087***	0.824***	0.833***	0.834***
	(11.34)	(11.69)	(11.63)	(8.21)	(8.55)	(8.54)	(12.90)	(13.46)	(13.42)
Pc_1	−1.038*		0.046	−0.035**		−0.005	−0.189*		0.049
	(−2.56)		(0.12)	(−3.13)		(−0.39)	(−2.19)		(0.63)
Regu	0.269	−0.042	−0.312	0.005	−0.005	−0.008	−0.001	−0.050	−0.121
	(0.74)	(−0.12)	(−0.80)	(0.56)	(−0.73)	(−0.85)	(−0.02)	(−0.77)	(−1.63)
Pc_1* Regu	0.394		0.422	0.004		0.004	0.100		0.109*
	(1.55)		(1.72)	(0.54)		(0.59)	(1.93)		(2.20)
Pc_2		2.041***	2.089***		0.062***	0.059***		0.433***	0.467***
		(4.38)	(4.66)		(4.61)	(4.00)		(3.85)	(4.20)
Pc_2* Regu		0.929***	0.916***		0.020***	0.020***		0.194***	0.194***
		(4.23)	(3.93)		(3.66)	(3.61)		(4.47)	(4.40)
Year	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Region	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Constant	−15.947***	−16.142***	−16.129***	−0.343***	−0.348***	−0.347***	−3.469***	−3.512***	−3.524***
	(−10.21)	(−10.84)	(−10.65)	(−10.54)	(−10.59)	(−10.54)	(−12.36)	(−13.24)	(−13.24)
Obs.	8838	8838	8838	8838	8838	8838	8838	8838	8838
Pseudo R^2	0.060	0.062	0.062	0.145	0.154	0.154	0.126	0.130	0.130
F/Chi^2	102.560	320.908	444.524	36.456	61.562	97.191	2842.394	7149.901	1.4e + 04

Notes: t statistics in parentheses.

* p < 0.05,

** p < 0.01,

*** p < 0.001.

Source: The authors.

Table 5. The regression results by including the moderating effect of firm innovation.

	M1	M2	M3	M4	M5	M6	M7	M8	M9
	EI_1 (Tobit model)			EI_2 (Tobit model)			EI_3 (Logit model)
Bothpc	1.932***	0.018	0.113	0.052***	−0.007	0.004	0.363***	−0.026	−0.047
	(4.00)	(0.05)	(0.20)	(4.05)	(−0.69)	(0.25)	(3.60)	(−0.30)	(−0.39)
Age	0.017	0.013	0.013	0.000	0.000	0.000	0.003	0.002	0.002
	(1.04)	(0.77)	(0.81)	(0.86)	(0.50)	(0.63)	(0.94)	(0.71)	(0.67)
Gender	1.398***	1.327***	1.334***	0.028**	0.026**	0.027**	0.268***	0.252***	0.254***
	(3.88)	(3.59)	(3.64)	(3.02)	(2.79)	(2.81)	(3.79)	(3.48)	(3.51)
Edu	−0.125	−0.114	−0.122	−0.002	−0.002	−0.002	−0.034	−0.030	−0.032
	(−1.01)	(−0.89)	(−0.98)	(−0.72)	(−0.50)	(−0.68)	(−1.14)	(−0.99)	(−1.06)
Fage	0.003	−0.020	−0.019	−0.001	−0.001	−0.001	0.007	0.001	0.002
	(0.08)	(−0.61)	(−0.56)	(−0.81)	(−1.55)	(−1.46)	(0.98)	(0.19)	(0.25)
Fsize	1.373***	1.299***	1.299***	0.014***	0.012***	0.012***	0.255***	0.239***	0.239***
	(14.79)	(13.86)	(14.06)	(5.44)	(4.46)	(4.50)	(14.27)	(13.57)	(13.89)
ROS	6.246***	5.996***	6.012***	0.179***	0.172***	0.173***	1.405***	1.350***	1.356***
	(7.83)	(7.51)	(7.46)	(6.03)	(5.68)	(5.70)	(7.51)	(7.48)	(7.36)
Export	2.153***	2.186***	2.176***	0.031**	0.032**	0.031**	0.488***	0.496***	0.494***
	(4.71)	(4.82)	(4.78)	(2.98)	(3.12)	(3.04)	(5.01)	(5.11)	(5.08)
Sgm	−1.279***	−1.229***	−1.229***	−0.035***	−0.033***	−0.033***	−0.272***	−0.261***	−0.262***
	(−5.47)	(−5.38)	(−5.44)	(−4.32)	(−4.28)	(−4.27)	(−4.73)	(−4.71)	(−4.71)
Dboard	0.434*	0.401*	0.410*	0.023***	0.022***	0.022***	0.087*	0.079*	0.081*
	(2.40)	(2.23)	(2.28)	(3.69)	(3.57)	(3.68)	(2.21)	(2.00)	(2.06)
Sboard	0.705*	0.686*	0.680*	0.023**	0.023**	0.022**	0.128*	0.128*	0.126*
	(2.36)	(2.31)	(2.29)	(2.70)	(2.68)	(2.62)	(1.96)	(2.00)	(1.96)
Ind	3.842***	3.839***	3.854***	0.081***	0.081***	0.082***	0.813***	0.815***	0.820***
	(11.34)	(11.27)	(11.42)	(8.31)	(8.35)	(8.46)	(12.94)	(12.99)	(13.30)
Pc_1	−0.850*		0.112	−0.026*		−0.001	−0.144		0.071
	(−2.04)		(0.28)	(−2.42)		(−0.05)	(−1.67)		(0.86)
Inno	18.968***	12.942**	20.351***	0.979***	0.701**	1.027***	4.552***	2.874**	4.747***
	(5.23)	(3.15)	(4.94)	(4.34)	(3.10)	(3.63)	(4.23)	(2.62)	(3.98)
Pc_1*Inno	−13.473***		−11.905***	−0.585**		−0.540**	−3.371***		−3.078***
	(−4.30)		(−3.73)	(−2.95)		(−2.96)	(−3.71)		(−3.42)
Pc2		2.146***	2.058***		0.064***	0.056***		0.452***	0.456***
		(4.67)	(4.65)		(4.64)	(3.98)		(4.06)	(4.15)
Pc2*Inno		−6.306	−5.064		−0.228	−0.161		−1.311	−0.898
		(−1.30)	(−1.16)		(−0.91)	(−0.71)		(−1.00)	(−0.78)
Year	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Region	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Constant	−16.379***	−16.398***	−16.472***	−0.354***	−0.356***	−0.357***	−3.552***	−3.538***	−3.575***
	(−10.58)	(−11.07)	(−10.86)	(−10.73)	(−10.69)	(−10.67)	(−12.68)	(−13.14)	(−13.05)
Obs.	8838	8838	8838	8838	8838	8838	8838	8838	8838
Pseudo R^2	0.060	0.061	0.061	0.168	0.170	0.174	0.128	0.130	0.130
F/Chi^2	125.190	176.127	183.138	25.249	42.227	42.106	2318.104	6015.056	1.1e + 04

Notes: t statistics in parentheses.

* p < 0.05,

** p < 0.01,

*** p < 0.001.

Source: The authors.

Table 6. The endogeneity analysis by using instrument variable.

	M1	M2	M3	M4	M5	M6	M7	M8	M9
	EI_1 (Tobit IV model)			EI_2 (Tobit IV model)			EI_3 (Probit IV model)
Control^a	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Pc_2	11.944***	12.405***	11.803***	0.323***	0.333***	0.313***	1.326***	1.378***	1.311***
	(6.11)	(7.04)	(6.06)	(8.32)	(8.86)	(8.20)	(6.70)	(7.70)	(6.58)
Pc_2*Regu		2.089***			0.041**			0.269***
		(2.87)			(2.49)			(3.43)
Regu		−0.737			−0.018			−0.121**
		(−1.41)			(−1.61)			(−2.30)
Pc_2*Inno			−17.164			−0.330			−1.431
			(−1.46)			(−0.54)			(−0.88)
Inno			17.173***			0.713*			1.781**
			(2.70)			(1.92)			(2.14)
Year	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Region	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Constant	−14.929***	−14.973***	−14.929***	−0.315***	−0.317***	−0.312***	−1.801***	−1.800***	−1.805***
	(−10.49)	(−10.94)	(−10.56)	(−10.65)	(−10.44)	(−10.18)	(−13.70)	(−14.68)	(−13.69)
Obs.	8838	8838	8838	8838	8838	8838	8838	8838	8838
Chi^2	2957.097	3803.375	2909.833	423.653	1260.499	525.000	5841.346	7383.604	6580.416

Notes: t statistics in parentheses.

* p < 0.1,

** p < 0.05,

*** p < 0.01.

^a The control variables are the same as in Tables 3–5.

Source: The authors.