Environment Regulation And Corporate Environment Protection Investment

With the deepening of resource constraints and the deterioration of ecological environment in China,the traditional industrial development model is unsustainable.General Secretary Xi pointed out in the report of the 19th session of national congress of the communist party of China that correctly handling the relationship between economic development and environmental protection is an inevitable requirement to break the resource constraints and change the mode of economic development.Coordinating economic development and environment protection not only requires top level design,but also depends on the effective execution of environment regulation.Since 1979,environment regulation has been in effect in China for nearly 40 years.From the aspects of legal norms,economic constraints and social supervision,the corporate of China have been guided to strengthen environment protection investment in order to fulfill their environment protection responsibilities.Scholars have not reached a consensus on the relationship between environment regulation and corporate environment protection investment and few scholars have examined the role of agency cost in the mechanism of environment regulation from the perspective of agency cost.When the corporate has a high level of agency cost,the opportunistic psychology,cash flow preference and demand level selection of the manager will trigger the managerial entrenchment behavior for environment protection investment projects,which will affect the decision making process and weaken the effect of environment regulation on environment protection investment.From the perspective of agency cost,the paper explores the impact of agency cost on the relationship between environment regulation and environment protection investment of corporate.In addition,as the executor of environment regulation,the behavior preference of government will also affect the effect of environment regulation.Because of the special nature of property rights of state owned corporate,local government may be captured by state owned corporate in the process of environment regulation.Therefore,the paper combines the nature of property rights to further study.Based on the analysis above,the paper analyses the mechanism of environment regulation on corporate environment protection investment with the institutional theory,analyses the moderating effect of agency cost with the managerial entrenchment theory and further discusses the influence of the nature of property rights with the capture theory of regulation.The paper takes Chinese A share listed corporate in heavy polluted industry from 2008 to 2016 as the research object.Then,through the OLS test and the empirical result,the paper gets the following conclusions:Environment regulation has a positive impact on corporate environment protection investment.The agency cost of corporate will weaken the role of environment regulation in promoting corporate environment protection investment.When further considering the nature of property rights,the samples of non state owned corporate are more sensitive to the change of environment regulation intensity,but in the samples of state owned corporate,the negative effect of agency cost is more significant.The innovations of this paper are as follows.Firstly,as for the perspective of research,the paper comprehensively analyses the common influence of external and internal factors on the decision making mechanism of environment protection investment from a perspective of agency cost and expands the research on the decision making mechanism of corporate environment protection investment.Secondly,as for research content,the paper explores the impact of agency cost on the effect of environment regulation with the managerial entrenchment theory.The paper also introduces the capture theory of regulation to explore the impact of the nature of property rights on the effect of environment regulation,which has constructive significance for government to improve and optimize the system design and the supervision system of environment regulation.