On Environmental Regulation,Green Innovation And Corporate Performance

With the extensive economic growth with high energy consumption and high pollution,the problems of worsening ecological environment and tightening resource constraints have increasingly challenged the sustainable development of society and the economy in various countries around the world.In this regard,the demands for green development are increasing all over the world.How to prevent pollution and achieve green development has become a major issue of common concern to many countries in the world.In recent years,China has taken ecological environment construction and green technology innovation as important development strategies to varying degrees.In particular,the report of the 19th National Congress of the Communist Party of China proposed to build a corporate-oriented,market-oriented green technology innovation system,marking that China’s green development strategy has shifted from environmental regulation to environmental regulation and innovation drive.However,it is inconclusive whether environmental regulations could force corporate green innovation and play the Porter effect,its impact on corporate performance is even more controversial,because environmental regulations and green innovation and corporate performance have certain conflicts or contradictions in some cases and environmental regulation tools with different constraints have different effects on green innovation and corporate performance.Therefore,examining the heterogeneous environmental regulation tools separately and exploring the environmental regulation methods that will help economic benefits in the long run are of great significance for promoting high-quality economic development.Based on the background of China’s advocacy for high-quality economic development and the transformation of green technological innovation systems,this thesis examines the effects of heterogeneous environmental regulation tools on green innovation,and further explores the impact on corporate performance and its internal mechanisms.The research content includes four levels:First,based on the realistic background of international environmental issues,China’s environmental regulation,and China’s level of green innovation,the research issues are defined,and the core concepts in the research issues are defined to clarify the research content and scope.Secondly,this article summarized the research status and basic theory,summarized and analyzed the evolution of China’s environmental regulatory policies,and the three environmental regulation tools of environmental protection law,green credit policy and compulsory social responsibility disclosure that this article focuses on,laying a foundation for the study.Thirdly,following the thinking logic of the Porter Hypothesis,based on related theories such as Externality Theory,Pigou Theory,Property Rights Theory,Legitimacy Theory,Resource-based Theory,and Stakeholder Theory,aiming at the core issue of whether environmental regulation could improve corporate performance by driving green innovation,a research paradigm of "Environmental Regulation-Green Innovation-Corporate Performance" is proposed.Moreover,according to the heterogeneity of the constraint methods of different environmental regulation tools,environmental regulations are divided into market-based instrument(MBI),control and command(CAC)and information-based remedies(IBR).Taking environmental protection law,green credit policy,and mandatory CSR disclosure policy as examples,this thesis studied the impact of different environmental regulation tools on green innovation,the impact of green innovation on corporate performance,and the impact of different environmental regulation tools on corporate performance by affecting corporate green innovation.And then,taking 2007-2016 Chinese A-share listed companies as samples and using three quasi-natural experiments were used to conduct empirical tests on the above three specific issues.Finally,the conclusions are drawn from the analysis of the research results,and policy recommendations are put forward based on China’s environmental regulatory policies and the status of corporate green innovation.The core conclusion of this article is that environmental regulation can improve corporate performance by driving corporate green innovation,but the effects of different types of environmental regulation tools are different.Particularly,①MBI,CAC and IBR could drive corporate green innovation through mechanisms that increase pollution costs,set mandatory standards,and strengthen the corporate normative motivation,but the green credit policy and mandatory CSR disclosure policy have a lagging effect on the promotion of corporate green innovation.② Green innovation can improve corporate performance in terms of efficiency,effectiveness and adaptability,but it has a lag to the improvement of corporate profitability.③MBI help to improve the corporate performance in terms of efficiency and effectiveness.IBR mainly improve the corporate performance in terms of effectiveness.The impact of CAC on corporate performance depends on the regulatory approach(For example,green credit policy reduces corporate performance as a whole,and only improves the performance of companies with high financing constraints,but among them,the performance of those companies with high financing constraints and green innovation is improved,the performance of those companies with high financing constraints but no green innovation is reduced).④When environmental regulation has a significant impact on corporate performance,no matter what type of regulation tool,green innovation plays an intermediary role between the two.⑤The impact of MBI and CAC on green innovation,the impact on corporate performance,and the intermediary role of green innovation are more pronounced in state-owned enterprises,low-concentration markets,and central and western regions.These impacts of IBR are more significant in non-state-owned enterprises,low-concentration markets,and central and western regions.Based on this conclusion,China’s green development institutional system should strengthen the construction of environmental information disclosure systems,strengthen gradient punishment settings in environmental protection laws,formulate differentiated environmental regulation systems,strengthen the application of MBI and IBR,and strengthen enterprise green innovation awareness.There are four main research contributions:First,the economic consequences of the system and organizational motivation are brought into a unified research framework.The new Environmental Protection Law,green credit policy and mandatory CSR information disclosure policy are taken as examples to study the impact of heterogeneous environmental regulation tools(MBI,CAC,and IBR)on corporate green innovation and its internal mechanisms.It was found that the three types of environmental regulation tools have different impact mechanisms on corporate green innovation,namely,driving green innovation through mechanisms that increase pollution costs,set mandatory standards,and strengthen the corporate normative motivation.This conclusion deepens the study of the Weak Porter Hypothesis.Second,unlike previous studies that found that environmental regulation can promote or inhibit green innovation in enterprises,this thesis found that the impact of different types of environmental regulation tools on corporate performance is different,that is,MBI and IBR are superior to CAC in improving corporate performance,which expands the study of the Narrow Potter Hypothesis.Third,based on the research paradigm of the Strong Porter Hypothesis,this thesis constructs a research paradigm of "Environmental Regulation-Green Innovation-Corporate Performance".This expands the research on the impact mechanism of environmental regulation on corporate performance,and the economic consequences of different environmental regulation tools.Fourth,from the perspective of property rights,market structure and regional heterogeneity,it enriches the theoretical framework and reveals the boundary conditions of the Porter Hypothesis.Of course,this article only uses the environmental protection law,green credit policy,and mandatory CSR disclosure policy as examples to study the economic consequences of environmental regulation tools.The specific mechanisms of other environmental regulation tools need to be further studied.