Environmental violations and financial distress risk: Evidence from Chinese listed heavily polluting companies

IF 4.8 2区经济学 Q1 BUSINESS, FINANCE

Pacific-Basin Finance Journal Pub Date : 2024-11-19 DOI:10.1016/j.pacfin.2024.102583

Kai Xing , Fang Yang , Ping Liu , Jue Wang , Junchuan Wu

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Abstract

This study uses data from Chinese A-share listed companies in heavily polluting industries from 2012 to 2021 to investigate the influence of environmental violations on the risk of financial distress. Empirical results show that if a company is involved in environmental violations, the probability of experiencing financial distress increases. This finding is validated through a series of robustness tests. Mechanism analysis reveals that environmental violations exacerbate financial distress through two channels: increased financing constraints and decreased internal control quality. Heterogeneity analysis indicates that the aggravating effect of environmental violations on financial distress is stronger in firms with high levels of information asymmetry and low female representation on the board of directors. Further analysis finds that the new Environmental Protection Law has a negative moderating effect on the relationship between environmental violations and financial distress. These findings provide important insights into how corporate governance and legislation can protect the environment and achieve sustainable development.

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环境违法与财务困境风险：来自中国重污染上市公司的证据

本研究利用 2012 年至 2021 年中国 A 股重污染行业上市公司的数据，研究环境违法行为对财务困境风险的影响。实证结果表明，如果一家公司涉及环境违法行为，其遭遇财务困境的概率就会增加。这一结论通过一系列稳健性检验得到了验证。机制分析表明，环境违法行为通过两个渠道加剧财务困境：融资约束增加和内部控制质量下降。异质性分析表明，在信息不对称程度高、董事会中女性代表比例低的企业中，环境违规对财务困境的加剧效应更强。进一步分析发现，新《环境保护法》对环境违法行为与财务困境之间的关系具有负向调节作用。这些发现为公司治理和立法如何保护环境和实现可持续发展提供了重要启示。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Pacific-Basin Finance Journal BUSINESS, FINANCE-

CiteScore

6.80

自引率

6.50%

发文量

157

期刊介绍： The Pacific-Basin Finance Journal is aimed at providing a specialized forum for the publication of academic research on capital markets of the Asia-Pacific countries. Primary emphasis will be placed on the highest quality empirical and theoretical research in the following areas: • Market Micro-structure; • Investment and Portfolio Management; • Theories of Market Equilibrium; • Valuation of Financial and Real Assets; • Behavior of Asset Prices in Financial Sectors; • Normative Theory of Financial Management; • Capital Markets of Development; • Market Mechanisms.