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Enterprise characteristics and incentive effect of environmental regulation

Chunyu Guo et al.

International Review of Finance2025https://doi.org/10.1111/irfi.70032article
ABDC A
Weight
0.48

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.

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https://doi.org/https://doi.org/10.1111/irfi.70032

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@article{chunyu2025,
  title        = {{Enterprise characteristics and incentive effect of environmental regulation}},
  author       = {Chunyu Guo et al.},
  journal      = {International Review of Finance},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1111/irfi.70032},
}

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Enterprise characteristics and incentive effect of environmental regulation

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Evidence weight

0.48

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.41 × 0.4 = 0.16
M · momentum0.63 × 0.15 = 0.09
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.