Improving the sustainable development of firms: Evidence from the environmental constraint target policy in China

Abstract

Our study focuses on a new environmental policy tool, environmental constraint target policy, which minimizes the implementation bias of environmental objectives through effective decomposition of environmental targets and goal management, thus ensuring the expected environmental performance. Using longitudinal data (2006–2019) covering 11,252 Chinese firm‐year observations in high‐pollution industries, we find that environmental constraint target policy promotes firms' green innovation. Such an effect is stronger when the firms are intensively monitored and weaker when the firms are located in a region with lower environmental enforcement capability. Further analysis reveals that environmental constraint target policy can enhance firms' economic performance by promoting green innovation, thereby facilitating sustainable development.

How does financial openness affect pollution emission of industrial enterprises?—Empirical evidence from the entry of foreign banks in China

“…Given that China's region-by-region deregulation of foreign bank entry provided an excellent exogenous policy shock for pollution abatement at the level of industrial firms, this article employs the DID methodology to design a quasi-natural experiment to evaluate and analyze the pollution abatement effect of FO on industrial firms in China. The DID method is a causal inference method that is widely used for policy evaluation (Cheng & Xiong, 2024;Sraer & Thesmar, 2023;Zhou & Du, 2024). The reason why the DID method was chosen as the main research method is that it can utilize the available data on firms' emissions for causal inference while satisfying the parallel trend test.…”