Political connections, environmental violations and punishment: Evidence from heavily polluting firms
利用中国重污染企业环境违规数据，研究发现反腐败改革迫使政治关联独立董事辞职后，企业因环境违规受罚的可能性和频率显著增加，表明政治关联会削弱环境监管执行。
Using hand-collected data on violations of environmental regulations by heavily polluting firms in China, we examine the relationship between political connections and the probability of punishment for breach of such regulations. To this end, we exploit a regulatory reform, the enactment of Rule 18, a key component of China's anti-corruption campaign, which required politically connected independent directors to resign from their positions. Using difference-in-differences specifications, we find that firms from which politically connected directors resigned due to Rule 18 experience a significant increase in both the likelihood of ever being punished for environment-related violations and the frequency of punishment. The effect of Rule 18 is more pronounced among firms located in regions with less efficient judicial systems and higher levels of corruption, as well as firms that are not state-owned. Our evidence indicates that in the absence of effective regulation, political connections can be costly to the environment as they strongly affect the enforcement of environmental regulations.