Whether the Heavy-Polluting Enterprise in the Green Finance Reform and Innovation Pilot Zones Have Higher Investment Efficiency: Evidence from China.

Fuliang Xu

doi:10.6981/FEM.202503_6(3).0026

Authors

Fuliang Xu

DOI:

https://doi.org/10.6981/FEM.202503_6(3).0026

Keywords:

Green Finance; Investment Efficiency; Heavy-Polluting Enterprises.

Abstract

The implementation of green finance reform and innovation pilot zones (GFRIPZs) policy is a crucial practical exploration to realize the sustainable development of China’s economy and explore the experience of developing replicable mechanisms and systems of green finance. In this paper, we construct a quasi-natural experiment and use the difference-in-difference-in-difference (DDD) method to evaluate the influence of the pilot policy on the investment efficiency of heavy-polluting enterprises. Our finds suggest that heavy-polluting enterprises’ inefficient investments are significantly increased in the GFRIPZs. Besides, we reveal the mediating role of agency problems and financing constraints between the GFRIPZs and heavy-polluting enterprises, increased agency problems and reduced financing constraints decrease the investment efficiency of heavy-polluting enterprises.

Downloads

Download data is not yet available.

References

[1] R. Roll. The Hubris Hypothesis of Corporate Takeovers. J Bus Res, vol. 59 (1986), p.197-216.

[2] J.H. Ning, Z.M. Wan, X.Q Wang. Green credit policy and firm overinvestment. Journal of the Financial Forum vol. 26 (2021), p.7-16. (in Chinese).

[3] J.C. Stein. Chapter 2 Agency, information and corporate investment. Handbook of the Economics of Finance vol.1(2003), p.111-165.

[4] Zhang, Y.M., Zhang, F., Li, Y.X. 2017. Accounting conservatism, financing constraints and investment efficiency. Accounting Research 35-40+96. (in Chinese).

[5] G. Hovakimian. Financial constraints and investment efficiency: Internal capital allocation across the business cycle. J. Financial Intermediation, vol. 20 (2010), p.264-283.

[6] M Benlemlih, M. Bitar. Corporate Social Responsibility and Investment Efficiency. J. Bus. Ethics, vol. 148 (2018), p. 647-671.

[7] J.S. Ahmad, T.B.Heng, O.T San, C.L. Lee, et al. How Does Green Innovation Strategy Influence Corporate Financing? Corporate Social Responsibility and Gender Diversity Play a Moderating Role. INT J ENV RES PUB HE, vol.19 (2022.).

[8] J. Shi, C. Yu, Y. Li, T. Wang. Does green financial policy affect debt-financing cost of heavy-polluting enterprises? An empirical evidence based on Chinese pilot zones for green finance reform and innovations. Technol Forecast Soc Change vo, 179(2022).

[9] Y.G. Liu, J. Jiao, C. Zhang. Dividend policy, free cash flow and overinvestment: an investigation based on corporate governance mechanism. Nankai Business Review, vol.18 ( 2015), 139-150. (in Chinese).

[10] S.M. Chen, Z. Sun, S. Tang, D.H. Wu. Government intervention and investment efficiency: Evidence from China. J. Corp. Financ, vol. 17(2011), p. 259-271.

[11] C. Yan, Z. Mao, K.C. Ho. Effect of green financial reform and innovation pilot zones on corporate investment efficiency. Energy Econ. vol. 113(2022) 106185.