Study On Environmental Regulation、Internalization Of Environmental Cost And Financial Performance

At the 19 th National Congress of the Communist Party of China(CPC),it was proposed for the first time that the economy should shift from a stage of rapid growth to a stage of high-quality development,and that building an ecological civilization should be regarded as a major task of development for the Millennium.We must both develop the economy and protect the environment.More and more,the environmental problem has become a hot issue in the international discussion,and China’s attention to the environmental problem is getting higher and higher.In the past,the economic development was mainly based on the economic development of heavy industry,which inevitably led to the indiscriminate discharge of pollutants,causing serious damage to the environment.If we want to promote high-quality economic development and protect the environment,we need the visible hand of the government.By promulgating environmental regulation policies,the government constantly strengthens environmental regulation,and promotes the internalization of environmental costs through the collection of environmental taxes and emission right trading,which will increase the additional investment in environmental protection and tax expenditure of enterprises,thus increasing the production costs of enterprises.Under strict regulation,enterprise through environmental protection equipment replacement,green production,improve the production efficiency,set up the good enterprise image,enterprise through to the environmental protection investment produced a series of beneficial effect,under the strict environmental regulation can be offset or more than increase additional cost,improve the competitiveness of the enterprises,promote the sustainable development of economy and environment.Therefore,this paper will study the relationship among environmental regulation,environmental cost internalization and financial performance,and consider the mediating effect of environmental cost internalization.Through the analysis of the relationship between environmental regulation and financial performance,it can provide reference for the government and relevant departments in the formulation of environmental policies.This paper reviews the literature on environmental regulation,internalization of environmental cost and financial performance at home and abroad,studies and analyzes the status quo of the three,and expounds the regulation theory,externality theory,stakeholder theory and sustainable development theory.The research object of this paper is the heavily polluting industry.In the study sample,91 heavily polluting listed companies are selected.Stata15 statistical software is used to test the mediating effect of environmental cost internalization,as well as the relationship between environmental regulation and financial performance.The results show that:(1)Environmental regulation promotes long-term financial performance.(2)Internalization of environmental costs will inhibit short-term financial performance.(3)Environmental regulation will promote the internalization of enterprises’ environmental costs.(4)Internalization of environmental cost plays a partial mediating role in the relationship between environmental regulation and financial performance.This study provides an empirical basis for the promotion of environmental regulation on the long-term financial performance of enterprises,enriches the research on environmental regulation,internalization of environmental costs and financial performance,alleviates the resistance of enterprises when they undertake environmental responsibility and protect the environment,and enables the government’s supervision to play the maximum role.Finally,on the basis of empirical analysis,suggestions are put forward from the perspectives of the government and enterprises to make environmental regulation play a better role,further improve the competitiveness of enterprises and improve their financial performance.