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Is enterprise environmental protection investment responsibility or rent-seeking? Chinese evidence

Published online by Cambridge University Press:  27 August 2020

Xin-Feng Jiang Open the ORCID record for Xin-Feng Jiang [Opens in a new window] ,
Chun-Xiang Zhao ,
Jing-Juan Ma ,
Jian-Qiu Liu  and
Si-Hai Li Open the ORCID record for Si-Hai Li [Opens in a new window]
Xin-Feng Jiang
Affiliation:
College of Economics and Management, Huazhong Agricultural University, Wuhan, China
Chun-Xiang Zhao
Affiliation:
School of Accounting, Zhongnan University of Economics and Law, Wuhan, China
Jing-Juan Ma
Affiliation:
School of Accounting, Zhongnan University of Economics and Law, Wuhan, China
Jian-Qiu Liu
Affiliation:
School of Accounting, Hunan University of Technology and Business, Hunan, China
Si-Hai Li*
Affiliation:
School of Accounting, Zhongnan University of Economics and Law, Wuhan, China
*
*Corresponding author. E-mail: lshhhy0420@163.com
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Abstract

Having enterprises engaged in environmentally friendly behavior is an important part of reducing negative environmental impacts. This study makes a quantitative analysis against the backdrop of China's transitional economic system. The results show that politically-connected enterprises significantly reduce environmental expenditure, but this only holds for state-owned enterprises; private enterprises with political connections spend significantly more. Analysis of the efficiency of environmental expenditure indicates that, for private enterprises, environmental spending is used as a way to maintain political connections, with rent-seeking as the likely motivation. Politically-connected private enterprises have not reduced their emissions to the same extent as state-owned enterprises, despite increased expenditure. Given the scale of environmental degradation in China during a period of massive economic and social upheaval, the results of this analysis provide a quantitative case for policy change: governments should shift focus to the results that environmental spending produces.

Keywords

corporate environmental expenditureeconomic consequencepolitical connectionsproperty rights nature

JEL classification

Q56: Environment and Development • Environment and Trade • Sustainability • Environmental Accounts and Accounting • Environmental Equity • Population Growth P26: Political Economy • Property Rights Q51: Valuation of Environmental Effects
Type
Research Article
Information
Environment and Development Economics , Volume 26 , Issue 2 , April 2021 , pp. 169 - 187
Copyright
Copyright © The Author(s), 2020. Published by Cambridge University Press

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