Can the Introduction of an Environmental Target Assessment Policy Improve the TFP of Textile Enterprises? A Quasi-Natural Experiment Based on the Huai River Basin in China

Abstract

Green development is an inevitable requirement to build a modern economic system and fundamental solution to pollution problems. Exploring the relationship between environmental regulation and enterprise total factor productivity (TFP) has great significance for realizing the win-win goal of achieving both environmental protection and economic development. Based on a firm-level dataset from 2000-2007, this paper explores the economic effects of the Environmental Target Assessment Policy of Huai River Basin (ETAP, HRB) in 2004, an environmental regulation that clarifies the responsibility of local governments, by identifying changes in the TFP of the clothing industry (CMI). The empirical findings support that the ETAP can significantly promote improvement in the TFP using the difference in differences (DID) method. Robustness tests, such as the triple differences (DDD) and propensity score matching-difference in differences (PSM-DID), are used to address concerns about the DID approach. Analysis of dynamic effects shows that the ETAP has no impact on enterprise TFP in 2004 but significantly improve the TFP on the next three years (2005-2007). The heterogeneity test results indicate that nonstate-owned enterprises are more sensitive to the ETAP, and the coefficient of the average treatment effect is 0.033. In addition, the ETAP has no noteworthy impact on large- and medium-scale enterprises but results in an average increase of 0.037 in small-scale enterprises’ TFP.

Regulating non-financial reporting: evidence from European firms’ environmental, social and governance disclosures and earnings risk

“…The ATE method is a commonly used technique to estimate the effect of a policy/regulation change on firms’ actions across different domains, e.g. Li et al (2020), Vancin and Kirch (2020); and Iselin (2020). Ioannou and Serafeim (2017) use ATE to explore the impact of sustainability disclosure regulations on regulated firms’ ESG disclosures in China, Denmark, Malaysia and South Africa.…”

“…Significantly positive values of b 1 indicate the effectiveness of the EU directive in increasing the ESG disclosures of the treated firms. The ATE method is a commonly used technique to estimate the effect of a policy/regulation change on firms' actions across different domains, e.g Li et al (2020),Vancin and Kirch (2020);and Iselin (2020)Ioannou and Serafeim (2017).…”

Why Is Pollution from US Manufacturing Declining? The Roles of Environmental Regulation, Productivity, and Trade

“…We estimate a single α using this regression approach, and we use an additional implication from the model to scale this estimate for each sector. 20 We use the fact that α s represents pollution tax payments as a share of production costs. As equation (8) implies, under Cobb-Douglas production with constant returns to scale, the output elasticity α s is equal to the share of firm costs which represent pollution taxes.…”

Productivity and innovation in the Japanese construction industry

“…This can be seen in the TFP research that is a growth accounting method, and it can be seen from the process of deriving TFP by regressing trends over several years and then decomposing and examining them. In fact, for example, an analysis of TFP in relation to recent environmental goals (Li et al, 2020) used data from 2000-2007, and a data envelopment analysis (DEA) study of the quality of patents in high-tech industries (Zou et al, 2016) also uses data from 1997-2007. Third, DX (digital transformation) has been identified as a variable associated with TFP and the behaviour of innovative firms, especially in recent years, but it will take some time for its real effects to emerge.…”