CHINA’S ENVIRONMENTAL PROTECTION TAX AND GREEN TECHNOLOGY INNOVATION IN HEAVILY POLLUTING ENTERPRISES: QUANTITATIVE GROWTH AND QUALITY CHALLENGES
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Abstract
As global attention to sustainable development and environmental protection increases, policy tools play a crucial role in guiding enterprises towards green technological innovation. This study employs a quasi-natural experiment based on China’s Environmental Protection Tax Reform and uses data from heavy-polluting listed companies on China’s A-share market from 2009 to 2019 with a difference-in-differences (DID) approach to thoroughly investigate the impact of the environmental protection tax on corporate green technological innovation. The results indicate that the environmental protection tax reform significantly prompts activities in green technological innovation, particularly in terms of strategic innovation in quantity, while its effects on substantive quality innovation are relatively limited. Heterogeneity analysis reveals that the environmental protection tax policy specifically motivates green innovation in state-owned and large enterprises, with comparatively less impact on other types of enterprises. Further mechanism analysis demonstrates that the enhancement of commercial credit financing and the reduction of agency costs are key factors in promoting green technological innovation. This research provides robust empirical evidence for the refinement and deepening of China’s environmental protection tax system, highlighting the need for policy design in promoting green technological innovation in heavy-polluting enterprises to balance the dual objectives of increasing innovation quantity and enhancing quality.
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