Which is more Important,Strategy or Substance?——Green Tax Reform and Corporate ESG Performance
As China inaugurates an environmental protection tax to replace sewage charges in 2018,will compa-nies take substantive or strategic action in response?This paper uses the introduction of the Environmental Protection Tax Law as a quasi-natural experiment to examine the impact of environmental protection tax reform on corporate ESG performance from the perspective of tax rate changes.It is found that after the implementation of the Environmental Pro-tection Tax Law,the difference in ESG performance,S performance,and G performance of firms is not significant in regions where the tax rate is increased compared to regions where the tax rate remains unchanged,but the E perfor-mance of firms is significantly higher.The mechanism analysis shows that the above facilitating effect on the E perfor-mance of enterprises is realized through the enhancement of strategic environmental initiatives and strategic green inno-vations of enterprises,rather than substantive environmental actions and substantive green innovations of enterprises.Further analysis reveals that the pursuit of short-term goals and management short-sightedness are the reasons why com-panies emphasize"strategy"over"substance".This paper not only enriches the assessment of the impact of the enact-ment of the Environmental Protection Tax Law on the ESG performance of enterprises,but also provides a useful refer-ence for promoting the development of China's green tax system.
The Environmental Protection Tax LawESG performancestrategic initiativessubstantive actiontax rate
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