Impact of government ownership on private sector enterprises’ environmental responsibility: empirical evidence from Chinese listed firms

Abstract

Purpose

Against the background of actively promoting the reform of mixed ownership in China, this study regards government ownership in private sector enterprises (PSEs) as an important political connection mechanism and examines private holding listed companies in high-polluting industries that sold China A-shares from 2012 to 2019.

Design/methodology/approach

Using regression models such as Tobit and negative binomial estimation, the research empirically examines the impact of government ownership in PSEs on the corporate fulfillment of their environmental responsibilities.

Findings

Government ownership can effectively promote PSEs to fulfill their environmental responsibilities. Government ownership, as a corporate-level political connection mechanism, enables the government to provide firms with more environmental protection subsidies and environmental tax incentives, encouraging firms to fulfill their environmental responsibilities. When considering the policy risks faced by PSEs, government ownership effectively reduces the impact of policy uncertainty on firms’ fulfillment of environmental responsibilities. Additionally, verifying the economic development level of the city in which the firm is located makes the positive impact of government ownership on fulfillment of environmental responsibilities of PSEs in regions with lower economic development levels more significant.

Originality/value

Unlike existing studies that generally use the personal political identity of entrepreneurs to measure the political connections of PSEs, this study regards government ownership in PSEs as an important political connection mechanism. It provides a useful reference for China to formulate environmental protection policies for PSEs.

Citation

Yu, H., Song, C. and Song, Z. (2024), "Impact of government ownership on private sector enterprises’ environmental responsibility: empirical evidence from Chinese listed firms", International Journal of Emerging Markets, Vol. 19 No. 1, pp. 170-190. https://doi.org/10.1108/IJOEM-08-2021-1249