Institutional Efficiency,Corporate Environmental Investment And Corporate Value

How to achieve "win-win" for economic growth and environmental protection has always been the focus of public concern.Since the “Reform and Opening”,China’s rapid economic growth has also been accompanied by serious environmental pollution.Serious environmental pollution and ecological damage have not only caused huge economic losses,but also caused mass incidents,affecting social stability.Correspondingly,China has successively formulated a number of laws on environmental protection,and there are hundreds of administrative regulations related to pollution prevention and environmental protection.However,under the background of such environmental protection legislation,China’s environmental problems have not significantly improved,the problem of environmental pollution in China has not significantly improved,and it still faces severe challenges in the aspects of air pollution,water quality and ecological protection.The possible reason is that the implementation of environmental protection policies and regulations is ineffective.In response,China has also actively tried to carry out a series of reforms in administrative,judicial,and public participation in order to improve the efficiency of the implementation of environmental protection policies and regulations.The new institutional economics emphasizes that corporate behavior is subject to its institutional environment.Then,will changes in the efficiency of the environmental protection system affect the behavior of the company? Will it affect the company’s environmental investment decisions,promote enterprises to strengthen pollution control and environmental governance,and improve corporate environmental performance? So,this paper analyzes the impact of environmental protection system efficiency on corporate environmental protection investment from three aspects: local government environmental regulatory intensity(combined with the promotion mechanism of local officials),environmental justice efficiency,and public appeal.Finally,this article further discusses the impact of corporate environmental investment on corporate value and its mechanism.The main research contents and conclusions are as follows:Firstly,using the data of heavily polluting enterprises in listed companies from 2005 to 2014,the paper examines the impact of the intensity of environmental regulation by local governments and the pressure of promotion of local officials on corporate environmental investment.The findings are as follows:(1)strengthening environmental regulation by local governments can promote heavily polluting enterprises to increase investment in environmental protection;(2)the impact of environmental regulation intensity of local government on corporate environmental investment will be constrained by the pressure of promotion of local officials,that is,higher pressure of promotion will weaken the impact of environmental regulation on environmental investment.In the further analysis,a preliminary discussion was made on the role of changing the promotion evaluation mechanism.As a result,it is found that adding elements such as environmental quality to the assessment indicators and establishing a comprehensive assessment mechanism can effectively suppress the negative impact of local officials’ promotion pressure.Secondly,this paper studies the effects of an environmental justice reform on corporate environmental governance,which can be regarded as a quasi natural experiment based on the establishment of environmental courts in China.The results show that:(1)environmental protection investment of heavy pollution enterprises will increase significantly after the environmental court is set up in the local court;(2)the effects of the establishment of environmental courts on enterprise environmental protection investment are more significant in areas where the administrative intervention is more serious,SOE and private enterprises with political connections;(3)environmental courts also play a positive role in improving the local environment quality.The study of this paper will help to reveal the micro-mechanism of the effects of environmental justice on enterprise environment governance.Thirdly,using the data of heavily polluting enterprises in Shanghai and Shenzhen stock markets from 2004 to 2014,this paper examines the impact of public environmental appeals on corporate environmental investment.The findings are as follows:(1)the public environmental appeal has a significantly positive impact on corporate environmental investment,which can encourage heavily polluting enterprises to increase environmental investment;(2)the impact of public environmental demands on corporate environmental investment dependencies on the local government governance.In the areas where the governance level of local governments is relatively higher,the impact of public environmental demands on enterprises’ environmental investment is more significant,and the public participation is more helpful to promote the environmental governance of enterprises.Then,the paper further examines the mechanism of public environmental appeal affecting corporate environmental investment,and finds that there are two main ways,namely,information intermediary and political costs effect.In the context of poor information environment and high political costs,the public environmental appeal has a more significant positive impact on corporate environmental investment.Finally,by examining the impact of public environmental demands on the environmental governance of local governments and the regional environmental quality,the study finds that public environmental demands also have a positive impact on local government environmental governance and help to improve regional environmental quality.Finally,the paper chooses heavily polluting enterprises listed in Shanghai and Shenzhen Stock Exchanges from 2004 to 2014 as the research object and examines the impact of enterprises environmental investment on corporate value and its potential mechanism.The results show that: there is a significant "U" relationship between corporate environmental investment and corporate value,that is,when corporate environmental investment is low,the increase of environmental investment will lead to corporate value decline,but after gradually crossing the inflection point of the "U" curve,environmental investment has a significant positive impact on enterprise value.Further research has found that the potential mechanism that a higher level of environmental protection helps to increase corporate value lies in the "innovative compensation" effect and the "environmental premium" effect.On the one hand,a higher level of environmental protection investment may lead to a rise in the total cost of the enterprise,which may result in a "forcing mechanism" to stimulate enterprises to carry out more technological innovations and system innovations,which can improve the competitiveness of enterprises and increase corporate value.On the other hand,a higher level of investment in environmental protection can win a good reputation for enterprises and help enterprises to obtain many benefits such as customer stickiness,financing concessions,tax relief and government subsidies,which are helpful in increasing corporate value.Furthermore,by examining the impact of environmental protection system efficiency on the value of environmental investment,the results show that by enhancing the intensity of government environmental regulation,leading the public to participate in environmental governance and improving the environmental judicial efficiency to improve the efficiency of the environment protection system also has a significant positive impact on the value of environmental investment.It can promote the enterprises to cross the inflection point of the "U" curve of environmental protection investment and corporate value earlier and help to stimulate the innovative compensation effect and environmental premium of environmental protection investment to increase corporate value.