The role of environmental justice reform in corporate green transformation: Evidence from the establishment of China’s environmental courts

Purpose: The establishment of environmental courts in China provides a good opportunity to explores the economic effects of environmental justice reform. This paper investigates how the environmental justice reform can influence corporate green transformation from the perspective of green technology innovation and explores the potential mechanisms of how the environmental courts affect green technology innovation. The heterogeneous effects of environmental courts are also considered.Methodology: Using the establishment of environmental courts in China as a quasi-natural experiment, this paper adopts a difference-in-difference (DID) method to conduct empirical test based on data on Chinese listed A-shared firms from 2004 to 2019. Moreover, this paper use propensity score matching (PSM), tobit and negative binomial regression method to address possible estimation bias.Findings: The establishment of environmental courts significantly enhances green technology innovation among enterprises. The more effective judicial enforcement and better public awareness of the environment brought by the environmental courts will increase the cost of illegality and external supervision pressure for firms, which will lead firms to innovate in green technology. Furthermore, the positive and significant effect of environmental courts on green technology innovation is more pronounced in state-owned enterprises (SOEs) and enterprises located in regions where local protectionism is more serious or regions with more ideal environmental legal system

Does Business Group’s Conscious of Social Responsibility Enhance its Investment Efficiency? Evidence from ESG Disclosure of China’s Listed Companies

Business groups are industry exemplars whose investment decisions and social responsibility commitments are important for future sustainable development. We use data from China’s listed firms from 2012 to 2018 to investigate the effects of ESG-related disclosure on corporate investment efficiency by comparing the heterogeneity in ESG-related disclosure between group-affiliated firms and standalone firms, as well as between member firms within groups at different pyramid levels. We find that (1) group-affiliated firms are more willing to disclose ESG information than independent ones, and compared with lower-level pyramid member firms, higher-level pyramid member firms have a higher propensity of ESG disclosure; (2) over-investment for group-affiliated firms and under-investment for higher-level pyramid member firms are all moderated by their higher propensity for ESG disclosure. That is, corporate disclosure of ESG information significantly promotes investment efficiency; (3) by grouping the sample firms according to analyst attention and industry external financing dependence, respectively, we find that the promotion effect of ESG disclosure on corporate investment efficiency is more significant when the firms are followed by fewer analysts, or when firms belong to industries with higher external financing dependence. Our findings suggest that ESG disclosure plays an important role in driving a firm’s investment toward desirable levels