Does distance matter? Geographic proximity to EPBs and corporate environmental investment: Evidence from China

IF 4.8 2区经济学 Q1 BUSINESS, FINANCE

Pacific-Basin Finance Journal Pub Date : 2025-05-05 DOI:10.1016/j.pacfin.2025.102792

Xiaotong Yang , Yuan Zhang , Bing Zhu , Liding Shen

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Abstract

This study investigates the impact of geographic proximity to Environmental Protection Bureaus (EPBs) on corporate environmental investments by firms in heavily polluting industries. Using a sample of Chinese A-share listed companies in heavily polluting industries from 2000 to 2020, we find that geographic proximity to EPBs is positively associated with corporate environmental investment. Specifically, firms located closer to EPBs tend to invest more in environmental protection. This relationship remains robust even after addressing potential endogeneity concerns and holds consistently across alternative measures of regulatory distance and various city classifications. Mechanism analysis reveals that the increased environmental investment induced by geographic proximity to EPBs occurs through the strengthened local government environmental enforcement. Further analysis indicates that the negative impact of greater geographic distance on environmental investment is more pronounced for firms operating in opaque information environments and those facing higher transportation costs. Additionally, cross-sectional tests show that this negative effect is more pronounced when EPBs face greater environmental protection pressures and when firms are state-owned enterprises (SOEs) or face fewer financial constraints. Overall, our study identifies geographic proximity to EPBs as a critical factor influencing corporate environmental investment.

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距离重要吗？地理邻近环境保护局与企业环境投资：来自中国的证据

本研究探讨地理邻近环境保护局（EPBs）对重污染行业企业环境投资的影响。以2000 - 2020年中国a股重污染行业上市公司为样本，我们发现地理邻近环境保护局与企业环境投资呈正相关。具体来说，靠近环境保护局的企业往往在环境保护方面投资更多。即使在解决了潜在的内生性问题之后，这种关系仍然强劲，并且在监管距离和各种城市分类的替代措施中保持一致。机制分析表明，地理邻近环境投资的增加是通过地方政府加强环境执法来实现的。进一步分析表明，地理距离对环境投资的负面影响在信息不透明环境和运输成本较高的企业中更为明显。此外，横断面测试表明，当环境保护企业面临更大的环境保护压力，当企业是国有企业或面临较少的财务约束时，这种负面影响更为明显。总体而言，我们的研究确定了环境保护局的地理邻近性是影响企业环境投资的关键因素。

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.