{"title":"Enterprise characteristics and incentive effect of environmental regulation","authors":"Chunyu Guo, Wenjie Ma, Cunyi Yang, Runze Yang","doi":"10.1111/irfi.70032","DOIUrl":null,"url":null,"abstract":"<p>This study examines the incentive effects of environmental regulations—penalties, subsidies, and taxes—on corporate environmental investments, considering financing constraints and executives’ political connections. Findings reveal that penalties and taxes are more effective for firms with weaker financing constraints, while subsidies benefit those facing greater constraints. Political connections weaken the impact of penalties but enhance subsidy access and effects. Tax compulsion strengthens incentives for politically connected firms, and tax rebate policy amplify penalties’ effectiveness. Executive compensation also channels penalties’ influence. The study highlights the complementary nature of regulatory tools and advocates a multifaceted approach combining cost-based, reward-based, and market-driven measures to promote environmental transformation.</p>","PeriodicalId":46664,"journal":{"name":"International Review of Finance","volume":"25 3","pages":""},"PeriodicalIF":1.8000,"publicationDate":"2025-07-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Review of Finance","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/irfi.70032","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
This study examines the incentive effects of environmental regulations—penalties, subsidies, and taxes—on corporate environmental investments, considering financing constraints and executives’ political connections. Findings reveal that penalties and taxes are more effective for firms with weaker financing constraints, while subsidies benefit those facing greater constraints. Political connections weaken the impact of penalties but enhance subsidy access and effects. Tax compulsion strengthens incentives for politically connected firms, and tax rebate policy amplify penalties’ effectiveness. Executive compensation also channels penalties’ influence. The study highlights the complementary nature of regulatory tools and advocates a multifaceted approach combining cost-based, reward-based, and market-driven measures to promote environmental transformation.
期刊介绍：
The International Review of Finance (IRF) publishes high-quality research on all aspects of financial economics, including traditional areas such as asset pricing, corporate finance, market microstructure, financial intermediation and regulation, financial econometrics, financial engineering and risk management, as well as new areas such as markets and institutions of emerging market economies, especially those in the Asia-Pacific region. In addition, the Letters Section in IRF is a premium outlet of letter-length research in all fields of finance. The length of the articles in the Letters Section is limited to a maximum of eight journal pages.
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