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Using the Hubei province in China as the COVID‐19 pandemic epicenter and January 23, 2020 as the event date (the date the Chinese government announced the lockdown of Wuhan, the provincial capital), we document that while Chinese firms generally exhibited negative cumulative abnormal returns (CARs) around the event date, firms located far from the Hubei province experienced relatively less adverse impact by way of negative CARs than firms located close to and in the province. Moreover, firms that engaged strongly in corporate social responsibility (CSR) activities in terms of corporate donations prior to the event date experienced less of an adverse impact than those with no or weak CSR activities, suggesting that CSR serves an insurance‐like function that alleviates the adverse impact on stock returns precipitated by the negative investor sentiment stemming from COVID‐19.

China conducted a comprehensive overhaul of its environmental regulation as of April 2014. The regulation, which calls for a holistic approach to protect the environment, is also called the “Ecological Protection Red Line” (Red Line). It sets comprehensive standards for pollutants and mandates provinces to implement the regulations. The Porter and pollution haven hypotheses were tested for the impact of the Red Line on firm exports using a sample of Chinese A-share firms from 2011 to 2017. Our findings are consistent with the Porter hypothesis. The implementation of the Red Line has a positive impact on a firm’s exports. The findings are robust to alternative metrics of exports and different sub-samples. A firm’s innovation activities (in terms of research and development investments) and production efficiency were found to be the transmission channels, corroborating the underlying logic of the Porter hypothesis. Policy implications are discussed.