An Empirical Study on the Short-term Impact of the Environmental Protection Fee-to-Tax Reform on Corporate Investment Efficiency

This paper uses non-financial A-share listed companies in China from 2010 to 2020 as research samples, utilizing the quasi-natural experiment conducted through the implementation of the "Environmental Protection Tax Law". The study investigates the short-term impact of the environmental protection fee-to-tax policy on corporate investment efficiency using a generalized difference-in-differences approach. The results indicate that the implementation of the environmental protection fee-to-tax policy significantly suppresses corporate investment efficiency in the short term and increases firms' inefficient investment. Furthermore, it is found that the policy exacerbates the problem of corporate overinvestment, whereas its impact on underinvestment is not significant. After conducting robustness tests by substituting the dependent variables, the conclusion remains valid. Subsequent heterogeneity analysis was conducted, differentiating between state-owned controlling enterprises and non-state-owned controlling enterprises based on the proportion of state capital, compared to state-owned controlling enterprises, the impact of the policy is more significant on non-state-owned controlling enterprises; Additionally, the policy effects across different economic regions of China were analyzed, revealing that the policy's effect is most significant in the eastern region, significant in the western region, but not significant in the central region. The conclusions of this study further enrich the empirical evidence of the micro-effects of environmental regulation, extending the research on the effects of the environmental fee-to-tax policy, and also provide suggestions for policymakers to formulate effective market-incentive-based environmental regulatory policies.