Research on the Impact of Environmental Regulation on Corporate Financing Constraints: Evidence from Heavily Polluting A-share Listed Enterprises

Abstract

Amid China’s pursuit of Dual‑Carbon targets and ecological‑oriented economic growth, the present paper regards the strict enforcement of the revised Environmental Protection Law as a quasi‑natural‑experimental setting. Adopting the difference‑in‑differences (DID) model, this research analyzes the inner causal link between tightened environmental governance and financing obstacles confronting high‑polluting corporations. Empirical findings suggest that nationwide enforcement of the new‑version Environmental Protection Law greatly improves external financing conditions for heavy‑pollution firms and relieves their capital‑raising predicament. A further mechanism test validates that this environmental policy lowers agency expenses and pushes enterprises to standardize information disclosure practices. Such changes reduce information asymmetry between firm insiders and outside investors, and ultimately ease corporate financing limits.This study extends existing theories about environmental governance and micro‑level corporate decisions. It also supplies practical empirical evidence to coordinate ecological administration and sustainable high‑quality economic expansion.