Research On The Relationship Between Environmental Regulation And Enterprise Performance

The government,enterprises in China in heavy polluting industries and public forces should have different roles and functions in the relationship between environment and development.As the framer and supervisor of environmental policy,the government has the responsibility and function to guide and regulate enterprises' behavior.For the purpose of pursuing environmental quality and vital interests,the public will take the initiative to supervise polluting enterprises.If the enterprises want to maintain long-term industry competitiveness,good performance and sustainable development ability,they will take a series of strategic decision-making actions to solve all kinds of problems that enterprises are facing at present.Based on this background,this thesis attempts to explore the impact of environmental regulation and M&A on the environmental performance and economic performance of enterprises from the micro-perspective of M&A.This research combs and summarizes the relevant theories and literature research on environmental regulation,merger and acquisition behavior,enterprise performance and market competition,mainly including the analysis of the current situation of environmental regulation in China,the definition of concepts,the influencing factors and measurement methods,and also discusses the research on enterprise merger and acquisition,performance and industry competition.Subsequently,the relationship is studied in the framework of ‘System-Behavior-Performance'.Faced with the constraints of environmental regulation and the risks brought by higher costs,they are more likely to choose to increase the scale of enterprises through mergers and acquisitions of enterprises in related industries and increase the share-holding ratio of mergers and acquisitions to obtain advantages such as technology and emission permits,also the bargaining power with the government and society,which will also reduce the risk of increasing pollution control costs to a certain extent.As an intermediary variable,M&A industry characteristics of heavy polluting industries have significant intermediary effects on environmental protection investment,short-term financial performance and long-term development ability of enterprises.It indicates that enterprises can increase their scale and acquire key technologies.Otherwise the enterprises can meet the environmental regulatory standards set by the government in a short time by merging the enterprises belonging to the same industry,which can also improve the environmental investment status of enterprises.Although it is not conducive to the current financial performance,it is obviously an inevitable choice for polluting enterprises which have to accept environmental regulations passively.When the proportion of M&A holdings transmits the relationship between environmental regulation and corporate performance as an intermediary variable,besides the intermediary effect of environmental regulation on the long-term development ability of enterprises is not significant,it has a significant intermediaryeffect on the environmental investment status and short-term financial performance of enterprises.Enterprises should focus and reflect on the rationality and applicability of corporate strategies and specific M&A strategies,which is helpful to overcome their‘short-sighted' behavior.In terms of market competition as a moderating variable,the lower the degree of industry competition means the stronger positive relationship among the environmental regulation,M&A share-holding ratio and environmental protection investment compared with the enterprises with high degree of industry competition.The weaker the market competition,the weaker the negative impact of the share-holding ratio of M&A on the short-term financial performance of enterprises.Therefore,the enterprises should fully consider the degree of monopoly in the same industry,and do a good job of due diligence before the implementation of the strategy.Through the above analysis,the research can draw the following conclusions.The environmental regulation is an important factor affecting the performance of enterprises.M&A of the enterprises play an intermediary role in the relationship between the regulation and enterprise performance.Heavy polluting enterprises obtain industrial upgrading opportunities through mergers and acquisitions,enhancing the production and product levels of enterprises,adjusting the industrial structure,promoting the improvement of the economic environment and ecological environment of enterprises.As a result,the government can further updating the environmental regulations in line with the actual development situation,which will form a virtuous circle in the transmission mechanism of the influence of ‘environmental regulation-enterprise merger and acquisition-enterprise performance' and promote ‘win-win' of the ecological environment and economic development.Finally,based on the above empirical analysis of environmental regulation and mergers and acquisitions,this thesis puts forward relevant policy recommendations from the government,enterprise and social aspects.