Open AccessThe effects of the environmental protection tax law on heavily polluting firms in China
Author(s) -
Huwei Wen,
Weifeng Deng,
Qinglin Guo
Publication year - 2021
Publication title -
plos one
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.99
H-Index - 332
ISSN - 1932-6203
DOI - 10.1371/journal.pone.0261342
Subject(s) - business , leverage (statistics) , china , fixed asset , panel data , investment (military) , productivity , asset (computer security) , monetary economics , industrial organization , natural resource economics , international economics , economics , production (economics) , macroeconomics , computer security , machine learning , politics , computer science , political science , law , econometrics
In 2016, China implemented an environmental protection tax (EPTL2016) to promote the transformation and upgrading of heavily polluting industries through tax leverage. Using panel data of China’s listed companies, this study assesses the treatment effects of the EPTL2016 on the transformation and upgrading of heavily polluting firms by incorporating the intermediary role of the financial market. The empirical findings show that the EPTL2016 significantly reduced the innovation investment and productivity of heavily polluting firms but had no significant effect on fixed-asset investment. Additionally, EPTL2016 reduced the supply of bank loans to heavily polluting firms and increased the value of growth options for private enterprises and the efficiency of the supply of long-term loans to heavily polluting firms. Although the environmental policy of EPTL2016 benefits the transformation and upgrading of heavily polluting industries in many aspects, it generally hinders the industrial upgrading because of the reduction of bank loans.