Connecting to Green or Connecting to Grey: The Environmental Effect of Political Connections
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Newhuadu Business School, Minjiang University, Fuzhou, Fujian, China
School of Economics and Business Administration, Central China Normal University, Wuhan, China
Wang Yanan Institute for Studies in Economics (WISE), Xiamen University, Fujian, China
Submission date: 2023-09-18
Final revision date: 2023-11-20
Acceptance date: 2023-12-09
Online publication date: 2024-05-20
Publication date: 2024-06-07
Corresponding author
Wenyu Huang   

Wang Yanan Institute for Studies in Economics (WISE), Xiamen University, 361005, Xiamen, China
Pol. J. Environ. Stud. 2024;33(4):4825-4835
Employing Rule No. 18 of the China Communist Party for independent directors in 2014 as a quasi-exogenous shock, our paper investigates the effects of political connection disruptions on firms’ environmental performance in heavily polluting industries. We find that political connection disruptions will worsen firms’ environmental performance, which reduces firms’ environmental investment by 37.65%. Further analysis shows that this effect supports the government intervention hypothesis rather than the government resource hypothesis. This effect is especially prominent for firms that are in low-market pressure, small-scale, or high environmental regulation locations. Overall, our paper provides new insights into the environmental effects of political connections.
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