Compensation or Crowding Out?Command-and-Control Environmental Regulation and Corporate Risk-Taking:Evidence from A-Share Listed Chinese Companies
Environmental regulation is a powerful tool for the protection of ecological systems,while risk-taking in investment decision-making is an important condition for enterprises carrying out green transformation.This paper empirically examines the impact of command-and-control environmental regulation on corporate risk-taking and its mechanisms,based on the data of A-share listed companies from 2010 to 2021.The study finds that command-and-control environmental regulation significantly increases the level of corporate risk-taking.Mechanism analysis shows that command-and-control environmental regulation has a positive impact on corporate risk-taking through innovation,information,and resource mechanisms,and this impact is more significant in enterprises with a low degree of local fiscal decentralization,non-double-high enterprises,and enterprises with a high level of regional innovation culture.The results of the effectiveness analyses show that,although command-and-control environmental regulations increase risk-taking in the short term,they lead to capital allocation inefficiencies that reduce the long-term value of enterprises.The findings provide empirical evidence for promoting green corporate transformation and improving the government-led environmental policy regime.
command-and-control environmental regulationrisk-takingcrowding out effectcompensation effectenvironmental governance
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