Environmental protection investment on performance of heavy-polluting enterprises: evidence from China's A-share listed companies.

Heavy-polluting enterprises' investment in environmental protection will have a "crowding out effect" on their other inputs, affecting enterprise performance. However, if the environmental protection investment of enterprises improves their green technology innovation ability, resulting in the "innovation compensation effect," which can offset the "crowding out effect" of environmental protection inputs, it may have a positive impact on enterprise performance. This can offset the "crowding out effect" of environmental investment and may promote the performance of enterprises. At the same time, equity concentration plays the role of "tunneling effect" and "monitoring and incentive effect" in the process of environmental protection investment affecting the performance of heavy-polluting enterprises. The paper selects the data of A-share listed heavy-polluting enterprises in China from 2010 to 2019 and analyzes the impacts of environmental protection investment and green technology innovation on the performance of heavy-polluting enterprises by using a multidimensional panel fixed-effects model. The results show that environmental protection investment will improve the performance of heavy-polluting enterprises by improving their green technology innovation ability; green technology innovation plays a partly intermediary role in the process of environmental protection investment affecting the performance of enterprises, and the magnitude of this intermediary role is regulated by the concentration of corporate equity. Based on the results of the empirical study, it is recommended that heavy-polluting enterprises should accelerate the pace of green technology research and development and results transformation, optimize the proportion of equity allocation, and achieve the dual goals of fulfilling environmental responsibilities and enhancing corporate performance.