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Title: Environmental regulation and corporate financing-quasi-natural experiment evidence from China
Authors: Liu, X
Wang, E
Cai, D 
Keywords: Corporate financing
Corporate value
Environmental regulation
Heavily polluting enterprises
Regulatory intensity
Issue Date: 2018
Publisher: Molecular Diversity Preservation International (MDPI)
Source: Sustainability, 2018, v. 10, no. 11, 4028 How to cite?
Journal: Sustainability 
Abstract: The Environmental Protection Law, which includes 70 articles and major changes in six aspects compared to the old law, is called in Chinese society the new Environment Protection Law. When the law was implemented in 2014, it was an important event in China that could be seen as a natural experiment. Based on a difference-in-differences model, this paper considers all of the listed heavily polluting enterprises between 2011 and 2016 as the experimental group and all of the other firms in the same industries listed on the Chinese stock market as the control group and examines the impact of the new Environmental Protection Law on the corporate financing of heavily polluting enterprises and its mechanisms. The results show that the strict environmental law caused Chinese listed enterprises to face higher environmental regulation costs, public pressure and environmental litigation. The financing capacity of heavily polluting enterprises has dropped significantly, especially in areas with higher regulatory intensity. Furthermore, since the new Environmental Protection Law was established, overinvestment by China's heavily polluting enterprises has been significantly inhibited, and the decline in financing capacity exerts a mediating effect. The ultimate economic consequences of the new Environmental Protection Law are to decrease the corporate value of heavily polluting industries.
EISSN: 2071-1050
DOI: 10.3390/su10114028
Rights: © 2018 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (
The following publication: Liu, X.; Wang, E.; Cai, D. Environmental Regulation and Corporate Financing—Quasi-Natural Experiment Evidence from China. Sustainability 2018, 10, 4028 is available at
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