Taking China Pilot Free Trade Zone (PFTZ) as a new perspective of institutional environment optimization, this paper investigates its impact on corporate ESG performance. We find that the PFTZ positively enhances corporate ESG performance, which remains robust after various checks. The mechanism analysis shows that improving corporate environmental protection capacity and management efficiency are the main channels while strengthening labor protection and easing financial constraints can enhance the positive effect. Moreover, the positive effect of the PFTZ on corporate ESG performance is more pronounced in coastal regions, the service sector, and state-owned enterprises (SOEs).

In the international context of the surging tide of anti-globalization, China will raise the establishment of pilot free trade zone as a national strategy, and achieve the goal of promoting highquality economic growth through a series of reform measures, such as promoting investment liberalization and facilitation, improving investment promotion and protection mechanisms, and improving the level of overseas investment cooperation. To study the role of the pilot free trade zones on investment, the panel data of 46 cities from 2005 to 2018 are used to empirically test the investment growth effect and investment spillover effect of the pilot free trade zones by using the Difference-in-Differences Spatial Dubin Model. The results show that the pilot free trade zones can significantly promote investment growth and have a spillover effect on investment in surrounding areas. Through the grouping regression of the eastern, central, and western regions, it is found that the eastern pilot free trade zones have the most obvious investment spillover effect on the surrounding areas, and the central pilot free trade zones have a siphon effect on the investment in the surrounding areas. In addition, different batches of pilot free trade zones or the same batch of pilot free trade zones have different investment spillover effects on surrounding areas at different time points. Finally, policy suggestions are put forward: strengthen the strategic implementation of the pilot free trade zones, improve the spatial radiation mechanism, promote linkage development and differentiated development, and make the pilot free trade zones better promote investment growth and investment spillover.