Environmental Protection Fee-to-Tax and Corporate Environmental Social Responsibility: A Test Based on Corporate Life Cycle Theory

Abstract

Corporate environmental social responsibility enhancement is an important way to promote green and low-carbon economic transformation and achieve high-quality development. As an important reform of China’s environmental taxation system, environmental protection fees and taxes play a unique role in environmental governance. However, faced with the increase in the intensity of environmental regulations after the implementation of the environmental protection fee-to-tax, will firms take the initiative to assume environmental social responsibility (ESR)? This paper uses the implementation of China’s Environmental Protection Tax Law in 2018 as a quasi-natural experiment to study the impact of environmental protection fee-to-tax policy on corporate ESR from a life-cycle perspective. We find that, overall, the environmental protection fee-to-tax reform policy significantly increases the likelihood of corporate ESR by 66%. By the life cycle stage, the effect of environmental protection fee-to-tax policy is mainly reflected in maturity and decline stage firms, and the impact on growth stage firms is not obvious. The design of the current environmental protection tax system and the differences in financial status, business strategies, and environmental management levels of firms in different life cycle stages are important factors in this phenomenon. Further sub-sample regressions show that the environmental protection fee-to-tax policy significantly increases the ESR among state-owned, key regulated and higher financing-constrained firms, especially those in the maturity and decline periods. The findings of this paper enrich corporate life cycle theory and provide a reference for decision making to further improve environmental tax policies to stimulate a firm’s green and low-carbon transformation.

The Impact of Environmental Protection Tax Policy on the Financial Performance of Heavy Pollution Enterprises

“…X. R. Hu et al 2023;Jiang et al 2023). As the EPT makes the sewage cost of some enterprises higher than the period of sewage charges, resulting in a decline in corporate income under the same conditions, in order to restore or improve the level of income, enterprises need to increase profitability and competitiveness by improving production efficiency or reducing unit costs, which is beneficial to the FP of enterprises in the long run (Kong et al 2023;Lei et al 2023;Liu 2023;Ma & Cui 2023;Rao et al 2023).…”

“…Variable description Total assets turnover ratio, calculated as the operating income ratio divided by the average total assets). The selection of these variables is grounded in prior scholarly research (J Jiang et al 2023;. Jin & Lei 2023; Kwak 2019; Shi et al 2023), with detailed descriptions provided in Table1.…”

Perceived Environmental Corporate Social Responsibility Effect on Green Perceived Value and Green Attitude in Hospitality and Tourism Industry: The Mediating Role of Environmental Well-Being

“…ECSR is vital for enterprises to achieve both economic gains and the sustainable growth of businesses and the environment [7,17]. ECSR leads in enabling the transition to a low-carbon, high-quality economy [18] and fostering innovation [19]. Alam and Islam [14] indicated that ECSR has a major contribution to improving a company's green reputation and green competitiveness.…”

How Does Environmental Tax Influence the Scale and Efficiency of Green Investment among China’s Heavily Polluting Enterprises?

“…A substantial body of literature has inferred an array of positive effects of environmental taxes on firms. For instance, environmental taxes have been observed to stimulate green innovation [7,11], bolster productivity [9], spur environmental investment [15,16], improve market competitiveness [10], enhance firm performance [12], assist in de-capacities [8], and advance corporate environmental social responsibility [13].…”

“…This enabled us to delve deeper into the policy effect of the environmental tax increase in terms of the intensive margin rather than the extensive margin. Several recent studies have recognized this identification issue for improvement [11][12][13]; however, the scope of these studies remains limited, and the efficiency of green investment has yet to be examined.…”