Environmental Regulation, Promotion Pressure of Officials, and Enterprise Environmental Protection Investment

Abstract

This study expands on the impact of local government environmental regulation on enterprise environmental protection investment. Furthermore, it analyzes the influence promotion pressure of officials has on the scale of enterprise environmental investment. The results show that the environmental protection investment of companies in China is generally insufficient. The attitude of companies toward environmental protection is passive under the policy regulation. The environmental supervision of the government is also still at a low level. Both of these observations are far from the intentions of the government. There is a U-shaped relationship between the pressure of official promotion and the scale of enterprise environmental protection investment. Only when the pressure of official promotion exceeds a certain limit can it positively stimulate enterprises to invest in environmental protection. Environmental regulation also exerts a threshold effect on the environmental protection investment by enterprises. This research provides a new way to understand the decision-making behavior of local officials and the environmental protection responsibility of enterprises. This study provides recommendations for improving the environment appraisal and government supervision system in China.