Environmental Regulation and Corporate R&D Investment—Evidence from a Quasi-Natural Experiment
The question of whether environmental regulation stimulates innovation activities has long been important and controversial. This study explores an ideal setting, the low-carbon city pilot program conducted by the Chinese government as a quasi-natural experiment to address this question. We conduct...
| Main Authors: | , , |
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| Format: | Journal Article |
| Published: |
2021
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| Online Access: | https://doi.org/10.1016/j.iref.2020.11.018 http://hdl.handle.net/20.500.11937/86026 |
| _version_ | 1848764779350458368 |
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| author | Huang, J.C. Zhao, J. Cao, June |
| author_facet | Huang, J.C. Zhao, J. Cao, June |
| author_sort | Huang, J.C. |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | The question of whether environmental regulation stimulates innovation activities has long been important and controversial. This study explores an ideal setting, the low-carbon city pilot program conducted by the Chinese government as a quasi-natural experiment to address this question. We conduct a difference-in-differences approach to analyze the impact of environment regulation on R&D investment. We find that the program's adoption has led to an increase in R&D investment of 0.145% as a percentage of total assets and 0.273% as a percentage of sales, indicating a positive effect of environmental regulation on R&D expenditures. The increase in R&D expenditures is greater for firms experiencing a larger increase in government subsidies, a greater decline in corporate tax or a greater improvement in financial condition following the low-carbon pilot program. A series of robustness tests support a causal interpretation of our findings and indicate that the observed effect of the low-carbon pilot program on corporate R&D investment is unlikely driven by chance. Our results provide in-depth insights into the economic consequences of low-carbon regulation policies which could be of interest to academic researchers and policymakers. |
| first_indexed | 2025-11-14T11:24:47Z |
| format | Journal Article |
| id | curtin-20.500.11937-86026 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T11:24:47Z |
| publishDate | 2021 |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-860262021-11-19T04:03:53Z Environmental Regulation and Corporate R&D Investment—Evidence from a Quasi-Natural Experiment Huang, J.C. Zhao, J. Cao, June The question of whether environmental regulation stimulates innovation activities has long been important and controversial. This study explores an ideal setting, the low-carbon city pilot program conducted by the Chinese government as a quasi-natural experiment to address this question. We conduct a difference-in-differences approach to analyze the impact of environment regulation on R&D investment. We find that the program's adoption has led to an increase in R&D investment of 0.145% as a percentage of total assets and 0.273% as a percentage of sales, indicating a positive effect of environmental regulation on R&D expenditures. The increase in R&D expenditures is greater for firms experiencing a larger increase in government subsidies, a greater decline in corporate tax or a greater improvement in financial condition following the low-carbon pilot program. A series of robustness tests support a causal interpretation of our findings and indicate that the observed effect of the low-carbon pilot program on corporate R&D investment is unlikely driven by chance. Our results provide in-depth insights into the economic consequences of low-carbon regulation policies which could be of interest to academic researchers and policymakers. 2021 Journal Article http://hdl.handle.net/20.500.11937/86026 10.1016/j.iref.2020.11.018 https://doi.org/10.1016/j.iref.2020.11.018 restricted |
| spellingShingle | Huang, J.C. Zhao, J. Cao, June Environmental Regulation and Corporate R&D Investment—Evidence from a Quasi-Natural Experiment |
| title | Environmental Regulation and Corporate R&D Investment—Evidence from a Quasi-Natural Experiment |
| title_full | Environmental Regulation and Corporate R&D Investment—Evidence from a Quasi-Natural Experiment |
| title_fullStr | Environmental Regulation and Corporate R&D Investment—Evidence from a Quasi-Natural Experiment |
| title_full_unstemmed | Environmental Regulation and Corporate R&D Investment—Evidence from a Quasi-Natural Experiment |
| title_short | Environmental Regulation and Corporate R&D Investment—Evidence from a Quasi-Natural Experiment |
| title_sort | environmental regulation and corporate r&d investment—evidence from a quasi-natural experiment |
| url | https://doi.org/10.1016/j.iref.2020.11.018 http://hdl.handle.net/20.500.11937/86026 |