Can the National Specially Monitored Firms program improve corporate environmental performance?—Empirical evidence from China

Abstract

As an important measure of reform of the central environmental supervision, the National Specially Monitored Firms program has a significant impact on enterprise pollution control. However, there are few studies that have systematically studied the mechanism of this system on enterprise environmental performance. Based on the quasi natural experiment of the National Specially Monitored Firms program, this article uses the emission data of industrial enterprises from 2001 to 2009 to investigate the impact of the central environmental supervision on on corporate environmental performance by using the DID method. It is found that the National Specially Monitored Firms program has significantly improved the corporate environmental performance of the monitored enterprises. Heterogeneity analysis finds that when compared with enterprises with a higher degree of financing constraints, export enterprises, and enterprises with a lower level of economic development in the region, the implementation of the National Specially Monitored Firms program has a more significant effect on improving the environmental performance of enterprises with a lower degree of financing constraints, domestic enterprises, and enterprises with a higher level of economic development in the region. The mechanism test shows that improving the enterprise environmental protection equipment investment is not the only intermediary mechanism for the National Specially Monitored Firms program to improve corporate environmental performance. The conclusions of this article are not only conducive in optimizing the environmental governance methods but also inspirational for monitoring practices in other fields.