The Relationship Between Environmental Taxes, Technological Innovation and Corporate Financial Performance: a Heterogeneous Analysis of Micro-Evidence from China

As a formal environmental regulation, environmental tax is important for the green upgrading of industrial structure. In order to explore the impact mechanism of environmental tax on corporate financial performance, this paper constructs a difference-difference (DID) model with two-way fixed effects based on financial data of Chinese A-share manufacturing listed companies from 2015 to 2019. We have found that environmental taxes contribute directly and significantly to the improvement of financial performance and that technological innovation, in some degree, produces mediating effect. Financing constraints not only negatively moderate the relationship between environmental taxes and technological innovation; they also inhibit the impact of technological innovation on financial performance and have a moderate mediating effect as part of the indirect influence. In the heterogeneity analysis, the direct effect is more significant among State-owned enterprises (SOEs) and eastern enterprises, and the moderating effect of financing constraints is more significant among non-SOEs and eastern enterprises. This paper advances the understanding of economic consequences of environmental tax levies from the perspective of property and regional heterogeneity. It provides empirical evidence in support of the applicability of Porter’s hypothesis in China and makes suggestions for the optimization of environmental policy and improvement of financial performance of enterprises.