The literature has extensively explored the relationship between trade and envi-ronment, with most studies focusing on how trade affects the environment. However, our research takes a different approach by examining how air pollution affects firms’ exports. We use Chinese export and pollution data from 2000 to 2007 at the firm and county levels. By using fine particulate matter (PM2.5) concentrations as a proxy for air pollution and employing thermal inversion as an instrumental variable, we ffnd that a 1% increase in PM2.5 leads to a 0.89% reduction in firms’ exports. We also observe this negative effect of air pollution on entry and exit (i.e., extensive margins). Our mechanism analysis identiffes two channels through which air pollution affects exports. First, air pollution decreases exports by reducing firm productivity. Second, air pollution induces stringent environmental regulations, which reduces exports as firms need to increase abatement costs or reduce production to meet the environment standards.

Using firm-customer matched data from 2005 to 2020 in China, we examined the spillover effects and mechanisms of green innovation (GI) among supply chain partners. Results show a positive association between customers' GI and their supply firms' GI, indicating spillover effects in the supply chain. Customers' GI increase from the 25th to the 75th percentile leads to a significant 19% increase in supply firms' GI. Certain conditions amplify the spillover effect, including customers with higher bargaining power, operating in less competitive industries, and supply firms making relationship-specific investments or experiencing greater customer stability. Geographic proximity and shared ownership further enhance the spillover effect. Information-based and competition-based channels drive the spillover effect, while customers with higher GI encourage genuine GI activities by supply firms. External environmental regulations, such as the Chinese Green Credit Policy and Environmental Protection Law, strengthen the spillover effect, supporting the Porter hypothesis. This research expands understanding of spillover effects in the supply chain and contributes to the literature on GI determinants.

The role of Market-incentive environmental regulation (MIER) within the framework of environmental governance is patently evident. While extant literature lauds the advantageous outcomes attributed to the environmental protection tax (EPT) which as a representative of MIER, our empirical inquiry presents a contrasting narrative. By employing the sophisticated Difference-in-Difference-in-Difference (DDD) methodology and utilizing data from A-share listed firms in Shanghai and Shenzhen from 2015-2022, our investigation reveals a significant decrease in firms’ total factor productivity (TFP) following the implementation of EPT. Our core assertion is fortified through the discernment of two plausible mechanisms, namely, the production downsizing effect and the production capital crowding-out effect. Building upon this revelation, we delve into the nuanced pathways through which firms can strategically mitigate the impacts of EPT, encompassing the enhancement of human capital, amplification of research and development (R&D) investments, and fortification of overall firm resilience. Heterogeneity analysis discloses a notably heightened impact of EPT on TFP of state-owned enterprises (SOEs), larger enterprises and enterprises located in eastern regions. Ultimately, an approximately cost-benefit analysis conclusively demonstrates that the benefits derived from EPT far surpass the costs incurred by the concomitant industrial output reduction, which further illustrates the rationale for the implementation of EPT.

This study examines how localized carbon reduction policies affect corporate environmental productivity. Leveraging a quasi-experiment from China’s low-carbon pilot policy rollout across cities, we implement a difference-in-differences approach to estimate the causal impact of these interventions. Pilot policies significantly increased regulated polluting corporate environmental productivity by around 3 percentage points. The productivity gains persisted over time and were greater for financially constrained firms, firms facing less market competition and with lower capital intensity. Additional analysis reveals the pilots enhanced executive environmental awareness. Overall, our results demonstrate appropriately designed local regulations can improve environmental productivity.

Do firms adjust their hiring decisions after receiving environmental punishments? Using data on over 4.3 million job postings for Chinese listed firms from 2015 to 2021, we find that firms subjected to environmental punishments will subsequently increase their corporate green hiring (i.e., employees with green skills). Pressure from local environmental concerns and regulatory efforts incentivizes firms to increase their demand for employees with green skills. Environmental punishments have a more pronounced effect on corporate green hiring for non-state-owned enterprises and firms with lower financial constraints. Moreover, green hiring can have a remediation effect on firms' environmental performance and stimulate their green innovation activities and spillover effects on other firms within the industry. Overall, our findings shed light on corporate hiring decisions under environmental regulations.

This study examines the impact of strategic alliances on corporate green innovation. We find that strategic alliances significantly promote corporate green innovation. Mechanism tests indicate that strategic alliances promote green innovation through channels of attracting market attention, alleviating agency problems, and stimulating collaborative innovation. Heterogeneity analysis demonstrates that the effects of strategic alliances are more pronounced for firms in areas with stringent environmental regulations and a favorable business environment, and firms facing intense product market competition. The findings provide new insights into the green transformation and upgrading of enterprises.

This paper examines the spillover effect of environmental regulations on firms’ green technological innovation, from the perspective of supply chain relationships. Analyzing data from Chinese listed companies, we find that the average environmental regulatory pressure faced by the client firms of a supplier firm enhances the green patent applications filed by the supplier firm, indicating that environmental regulatory pressure from clients spills over to suppliers. When the industries of suppliers are more competitive or the proportion of their sales from the largest client is higher, suppliers feel more pressured to engage in green innovation, resulting in more green patent applications. Thus, via their negotiation power, client firms can prompt supplier firms to innovate to meet their demand for green technologies. Finally, we show that this effect is particularly pronounced when supplier firms are located in highly marketized regions, receive low R&D government subsidies, or have high ESG ratings.

Comprehensive evaluation and identification of the critical regulatory determinants of carbon emission efficiency (CEE) are very important for China’s low-carbon transition. Accordingly, this paper first employs an undesirable global super-hybrid measure approach to calculate the CEE of China’s iron and steel industry (ISI). We then further use spatial error and threshold regression models to examine the spatial and non-linear effects of heterogeneous environmental regulations on CEE, respectively. Our empirical results show that (1) CEE varies significantly across China’s regions, with the eastern region having the highest CEE score, followed by the western and central regions, with the northeast region ranking the lowest; (2) command-and-control and market-incentive regulations both promote CEE, whereas the public participation approach does not significantly contribute to performance gains; (3) all three types of environmental regulations exhibit a non-linear threshold effect on CEE; (4) openness level, technological progress, and industrial concentration enhance efficiency gains, while urbanization level exerts a negative impact on CEE. Our findings have important implications for the design of environmental regulations.

Exploiting the unexpected Central Environmental Inspections (CEI) in China as a quasinaturalexperiment, we find that public firms in polluting industries experience significant gains in both profitability and market valuation after the regulatory shock, relative to firms in nonpolluting industries. The outperformance of public firms can be explained by the retreat of their private competitors, many shut down due to poor environmental performance. Because firms seeking public listing are required to meet high environmental standards, CEI significantly strengthen public firms’ competitive position, leading to increased sales growth and market share. Moreover, the outperformance is more pronounced for firms with more eco-friendly technologies, consistent with strict environmental regulations increasing the marginal benefit of these technologies. We provide novel evidence of the bright side of environmental regulation by highlighting the importance of industry dynamics.

Using the data of Chinese listed firms from 2003-2020, this study applies a System GMM estimation approach to document that high local government ecological concerns increase a firm’s stock price crash risk. This finding remains consistent after addressing endogeneity issues and undergoing robustness checks. This study also reveals that the implementation of the new environmental protection law in 2015 mitigates the relationship between local government ecological concerns and stock price crash risk. Further analyses indicate that stricter environmental regulation and high subsidies, as well as enhanced corporate social responsibility and governance, can effectively alleviate the adverse effect of local government ecological concerns on stock price crash risk. In addition, we note that the influence of local government ecological concerns on stock price crash risk is more significant in the eastern region, heavily polluting industries, and non-SOEs. Lastly, the research identifies two potential channels through which local government ecological concerns can impact stock price crash risk by reducing the quality of information disclosure and intensifying investor disagreement.