Seeking the Shelter of Governments: The Unintended Consequence of Environmental Regulation on Firm Ownership Dynamics
研究发现，中国2005年将二氧化硫减排作为地方政府考核标准后，环境规制反而导致企业增加国有股份，以寻求政府庇护、规避严格监管或获取隐形利益。
We examine the causal effect of environmental regulation on firm ownership dynamics. China’s central government took the reduction of sulfur dioxide (SO2) emissions as the main performance evaluation criterion for local government leaders in 2005. Based on a difference-in-differences framework, our results show that environmental regulation increases firms’ state shareholdings, and these findings are robust to various endogeneity and sensitivity analyses. In particular, stringent regulations increase firms’ production costs, thus reducing their expected profits and causing undue burden on them. As a result, firms seek the shelter of governments by introducing more state shareholdings to escape stricter environmental regulations or to obtain invisible benefits. Our results are more significant in regions with low corruption, high transparency, or poor external business environments and highly polluting firms.