Environmental taxes, political connections, and firm financialization: Evidence from China's environmental tax reform

IF 7.4 2区经济学 Q1 BUSINESS, FINANCE

Finance Research Letters Pub Date : 2025-03-11 DOI:10.1016/j.frl.2025.107178

Zhijiu Yang , Fengyi You , Yanfang Qin , Ge Wu

引用次数: 0

Abstract

This study identifies the impact of environmental taxes on firm financialization. Using a triple-differences (DDD) strategy, we find that the enactment of the Environmental Protection Tax Law significantly inhibits firm financialization, which is primarily driven by firms with political connections. The decline in firm financialization can be attributed to increased investments in R&D and environmental protection, especially for politically connected firms. Further analyses suggest that environmental enforcement and legal environments amplify the inhibitory effect. We argue that the fee-to-tax reform leads environmental protection to the rule of law and reduces potential government-business collusion, which is conducive to long-term environmental governance.

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来源期刊

Finance Research Letters BUSINESS, FINANCE-

CiteScore

11.10

自引率

14.40%

发文量

863

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