Environmental Regulation,Management's Compensation Incentive And Corporate Environmental Investment

In order to meet the needs of the construction of ecological civilization and guide enterprises to take into account both economic and environmental benefits,China formally implemented the newly revised environmental protection law in 2015.As the "strictest environmental protection law in history",it made a breakthrough in environmental regulation system and government law enforcement,which further strengthened China's environmental regulate on.Investment in environmental protection is the key to ecological development.The enterprise environmental protection investment can make the enterprise change from paying attention to the pollution control after the event to the environmental management mode of pollution prevention before the event.So how does the implementation of the new environmental law affect enterprises' environmental investment?In addition,the investment decision-making is mainly decided by the management of enterprises,therefore,to establish the perfect and effective salary incentive mechanism to arouse the enthusiasm of the management of environmental protection investment is particularly important.For the enterprise environmental protection investment with the characteristics of comprehensive benefit investment projects,what kind of incentives can guide the enterprise to actively invest in environmental protection in the face of environmental regulations?Based on the official implementation of the new environmental protection law,this paper examines the impact of its policy effect on enterprises' environmental protection investment,and analyzes the impact of the differences in compensation incentive patterns on the relationship between environmental regulation and enterprises' environmental protection investment.The research contents are arranged as follows:Firstly,the research background and significance,the research contents and methods,and possible innovation points of this paper are introduced.Secondly,the research methods and results of relevant literatures at home and abroad are summarized,and the paper takes Porter's hypothesis,principal-agent theory,private income and private cost theory as the theoretical basis.Then,this paper uses the relevant data of listed companies from 2008 to 2017 as research samples,and uses the Difference-in-Difference model to empirically test the impact of the new environmental protection law on enterprises' environmental investment.Meanwhile,salary incentive factors are introduced to analyze the differences of policy effects of the new environmental protection law on enterprises' environmental protection investment under different salary incentive modes.Further,Focused on the new environmental protection law on the strengthening of local government responsibility and government economic subsidies,this paper examined the influence of administrative level and government subsidy level on the policy effect of the new environmental protection law.The empirical results show that:First,after the implementation of the revised environmental protection law,the level of enterprises' investment in environmental protection has been improved;Second,compared with enterprises with low salary stickiness level,enterprises with high salary stickiness level have greater improvement in environmental protection investment.Compared with the enterprises with low degree of equity incentive,the enterprises with high degree of equity incentive have greater improvement in environmental protection investment.Third,for enterprises with high administrative level,the new environmental law has a stronger promotion effect on enterprises' environmental investment.In enterprises with a high level of government subsidies,the new environmental protection law has a stronger promotion effect on enterprises' investment in environmental protection.The major contribution of this study:First,through the quasi-natural experiment of the new environmental protection law of 2015,this paper used the DID method to empirically test the impact of environmental regulation on environmental investment of enterprises in heavy pollution industries.To some extent,it solves the endogenous problem of the relationship between environmental regulation and enterprise environmental protection investment,enriches the relevant literature on the factors influencing enterprise environmental protection investment,and provides a new perspective for future research.Second,from the enterprise salary incentive mechanism,this paper studies how the new environmental protection law affects the environmental protection investment decisions of enterprises under different compensation incentive structures,enriches the research results of enterprise environmental investment,and expands the literature on the relationship between environmental regulation and enterprise environmental responsibility.Third,it is helpful to evaluate the implementation effect and economic consequences of the"new environmental protection law" from the perspective of enterprises' reaction at the micro level,which is of reference significance for relevant regulatory authorities and policy-making departments.Fourth,while verifying the government's laws and regulations,it also tests the role of executive compensation incentive mechanism,proving that under a reasonable executive compensation incentive mechanism,environmental regulations can have a more positive impact on enterprises'environmental protection investment.The research results can provide effective suggestions for companies seeking sustainable development to reasonably design executive compensation incentive mechanism,and also provide effective ideas and methods for regulatory authorities.