| The 19 th National Congress of the Communist Party of China(CPC)put forth a direction toward high-quality development,incorporating the concept that "lucid waters and lush mountains are invaluable assets" into the fundamental state policy.Its core content is to promote the optimization and upgrading of the economic structure while focusing on resolving environmental issues and improving the quality of life of the people.The report of the 20 th CPC National Congress further emphasized the need to push for a transformation in the quality,efficiency,and driving forces of economic development,focusing on promoting high-quality development.As a result,transitioning from a previous extensive and inefficient development model to a refined and efficient one has become an important issue of our time.The guiding role of regulatory norms on corporate economic activities has yielded abundant research achievements in the academic world.As China steps into a new era with new development strategies,a series of corresponding institutional reforms and legal adjustments have come into being.The impact of these on corporate operations and market behavior is gradually becoming evident.Traditional theories have provided fundamental categorization of the relationship between the legal environment and corporate operations,explaining the mechanisms through which the legal environment impacts microeconomic behaviors.Current empirical research builds on these theoretical frameworks to deepen and refine the specific roles of the legal environment,aiming to explain more comprehensive economic effects.The correlation between China’s legal environment and economic development is receiving increasing attention.From continuous optimization of the legal framework to in-depth reforms of the judicial system,Chinese enterprises are thriving in the soil of the rule of law,but research on how improvements in the legal environment affect the operation of the economy remains insufficient.As China’s economy continues to modernize,exploring the path to high-quality development is of great significance.Based on existing literature defining the concept of corporate high-quality development,such development must meet high standards,high levels,and high quality,with the following seven evaluation criteria: whether it is driven by social value,whether it has outstanding resource capabilities,whether it offers high-quality products and services,whether its operations are open and transparent,whether management mechanisms are effective,whether it has a high overall performance level,and whether it has a good social reputation.Therefore,referencing the existing literature’s portrayal of corporate high-quality development,this paper focuses on the improvement of the legal environment as the core and explores the impact of the legal environment on corporate high-quality development in terms of total factor productivity,information transparency,and sustainable development capacity.These aspects correspond to the three dimensions of high-quality development: resource management capability,operational openness and transparency,and social value driving.The following is the research idea of the legal environment improvement on these three dimensions.Under the current economic development model,enterprises face increasingly fierce domestic and international market competition.How to improve competitiveness and create higher quality economic value is a core issue for enterprises.At the same time,many scholars are paying more attention to how to scientifically measure corporate production efficiency.Total factor productivity(TFP)—considering the output efficiency of all production factors such as capital,labor,technology,and innovation—has become a key indicator for measuring the overall productive capacity of a company.Against this backdrop of widespread attention,in-depth exploration of the impacts of different factors such as corporate governance structure,market mechanisms,and policy environments on TFP has been conducted.This paper explores whether the improvement in the legal environment brought about by the establishment of environmental courts can guide enterprises to increase production efficiency.This paper also combines the special institutional environmental background to explore the impact of circuit courts on corporate information transparency under the backdrop of local protectionism.In 2022,the State Council issued the "Opinions on Accelerating the Construction of a National Unified Market," in which the concept of a "national unified market" was repeatedly mentioned.The concept emphasizes the importance of eliminating market barriers nationwide,promoting the free flow of resources,enhancing market efficiency,and strengthening market regulation.The prevailing local protectionism runs counter to the vision of a "national unified market." To build a "national unified market," it is necessary to first solve the stubborn problem of local protectionism.Local protectionism not only endangers the operational efficiency of the macroeconomy but also induces companies to engage in upward earnings management,resulting in lower quality of accounting information,poor information transparency,harm to the interests of stakeholders,and undoubtably hindering high-quality corporate development.This paper delves into the impact of the establishment of circuit courts as a legal practice on local protectionism and the governance of corporate earnings management.Besides evaluating corporate production efficiency and openness to information transparency,high-quality corporate development also includes an assessment of corporate capacity for sustainable development.The development model that neglects social welfare and economic externalities no longer meets the needs of current social development.Marked by the "Shanghai Stock Exchange Listed Company ESG Information Disclosure Guide" formulated by the Shanghai Stock Exchange in 2018,China began to focus on and promote ESG disclosure work for enterprises,reflecting Chinese regulatory agencies’ emphasis on corporate social responsibility and their push for sustainable development.Corporate ESG performance reflects a company’s level of commitment to environmental protection,social responsibility,and internal governance quality,comprehensively showcasing the company’s capacity for sustainable development.However,although many scholars have discussed the economic consequences of corporate ESG performance,research on the factors influencing corporate ESG is still to be supplemented,particularly from the perspective of external institutional environmental changes to understand corporate ESG behavior.From the perspective of overall external legal environment improvement,this paper further explores the influence of external environmental regulation on corporate ESG performance.In summary,this paper discusses the impact of the improved legal environment on high-quality corporate development from three aspects.Specifically,(1)Can an improved legal environment promote corporate production efficiency?(2)Can an improved legal environment suppress the deterioration of corporate operational transparency caused by local protectionism?(3)Can an improved legal environment encourage companies to pursue sustainable development strategies guided by green strategies? The first two questions can be generalized to signify that a strengthened rule of law can improve corporate operational behavior,enabling businesses to achieve long-term healthy development.The third question relates to the strategic development choices of companies—whether an improved legal environment can guide companies to implement green development strategies for strategic leadership.The research findings of this paper indicate that an improved legal environment significantly promotes high-quality corporate development.The legal environment plays an important role in enhancing corporate production efficiency,increasing corporate information transparency,and advancing corporate social responsibility performance.On one hand,the establishment of environmental courts creates an institutional pressure that significantly enhances total factor productivity for companies and motivates them to move towards more efficient and environmentally friendly production methods.On the other hand,the establishment of circuit courts effectively curbs local protectionist behavior and corporate earnings management,showing profound implications for market fairness and corporate governance transparency.Additionally,the improvement of the local legal environment also significantly enhances corporations’ performance in environmental,social,and governance(ESG)aspects,showcasing the important role of the legal environment in promoting sustainable corporate development and social responsibility performance.A sound legal system has a far-reaching influence not only on internal management and behaviors of the enterprise but also on the orderly operation and transparency of the entire market economy.This paper’s empirical tests lead to the following specific conclusions:First,environmental courts significantly increase corporate total factor productivity.In mechanism analysis,suppressing corporate illegal behaviors and incentivizing innovation are major reasons for the improvement of total factor productivity through environmental courts.The establishment and stronger judicial enforcement of environmental courts bring about heavier compliance pressure on companies.Facing the triple pressures of compliance costs,potential fines,and external public opinion,companies are inclined to enhance production efficiency and reduce pollution emissions.Additionally,heterogeneous analysis shows that environmental courts have stronger incentive effects on companies with slightly weaker innovation capabilities,those in mature phases,those with better internal governance mechanisms,and located in regions with poorer governance.This indirectly indicates that judicial independence can affect corporate operational behavior in specific aspects and that strengthening judicial independence is beneficial to improving economic operational efficiency.Second,circuit courts significantly increase corporate information transparency.This paper uses the extent of corporate earnings manipulation to demonstrate corporate information transparency,delving into the restraining function of circuit courts on corporate earnings manipulation and their role in different environments and corporate internal characteristics.In heterogeneous analysis,the paper has analyzed the impact of circuit courts on true corporate earnings management from perspectives of market environment,external governance,and internal governance.The results show that circuit courts have a more pronounced effect in curbing local protectionism in markets with high competition and low legal governance levels,and greater restraining effects in companies with weaker external governance and poor internal monitoring mechanisms.Further analysis in the paper reveals that local protectionism induces companies to engage in upwards true earnings management,while legal improvements can effectively curb this influence.These conclusions show that circuit courts are effective in suppressing earnings manipulation and that perfection and construction of the legal system are important measures to alleviate local protection,which can induce and distort corporate operational behaviors,leading to reduced information transparency,ultimately harming the long-term operation of the economy.Third,the improvement of local legal governance significantly enhances corporate ESG performance.In mechanism analysis,starting from the paths of motivating corporations to implement environmental regulation and restraining illegal environmental behavior,the results show that improvements in a local legal environment can effectively urge companies to establish environmental systems and governance,as well as curtail corporate environmental law-breaking behaviors.In heterogeneous analysis,the regulatory effect is stronger for polluting companies,stateowned enterprises,companies with more centralized internal power,and companies in less developed areas;companies with stronger reputations and higher quality of information disclosure respond more positively to the improvements in the rule of law.This result shows that a sound legal system contributes to corporate participation in and investment in ESG activities,encouraging corporations to engage more actively in contributing external value.This paper emphasizes that improvements in the legal environment are crucial to promoting high-quality corporate development.The empirical study focuses on’improvement in the legal environment’ at its core,centering on ’high-quality corporate development.’ The optimization of the legal environment is key to boosting highquality corporate development,pervading the empirical testing process of this research.In Chapter 4,the paper discusses the effect of the innovative legal practice of environmental courts on total factor productivity,demonstrating that excellent judicial practices can effectively propel economic development efficiency.In Chapter 5,the paper analyzes the harm of legal obstructionism and from the institutional backdrop of circuit courts,verifies that the improvement in the legal environment can effectively contain local protectionism and reduce the level of corporate upward earnings manipulation,and thereby increase corporate information transparency.Chapter 6discusses from the perspective of corporate ESG performance,how the improvement of local legal governance can guide companies to shoulder social responsibility and strengthen internal governance.The paper mainly has the following three aspects of innovation and research contribution:First,the paper examines the impact of the improved legal environment on highquality corporate development,extending the existing literature on the relationship between rule of law and the quality of corporate development.The research findings demonstrate that improvements in the legal environment can significantly raise corporate production efficiency,enhance corporate information transparency,and promote sustainable development.The paper’s empirical research first explores the effects of two specific legal practices—the environmental court and the circuit court—on corporate production efficiency and information transparency,mainly focusing on "corporate operational behavior." Subsequently,the paper explores from a holistic legal level how the improvement of the legal environment affects corporate sustainable development,primarily focusing on the influence on "corporate development strategy." It responds to the core issue of whether a perfected legal environment can effectively drive corporations towards high-quality development and verifies the importance of strengthening legal construction in promoting corporate value and providing internal drive for high-quality development.It offers a new perspective on understanding how the optimization of the legal environment can boost the quality of corporate operations.Second,the paper deepens the understanding of the relationship between rule of law and corporate operational behavior.The paper analyzes from both macro and micro perspectives the roles of legal improvements based on different dimensions of highquality corporate development.Specifically,it empirically answers three questions regarding the impact of the improved legal environment on economic operation:whether improvements in the legal environment can promote corporate production efficiency,whether they can increase corporate information transparency,and whether they can push for corporate sustainable development.Combined with the paper’s empirical findings,environmental courts significantly increase corporate total factor productivity;circuit courts significantly suppress true corporate earnings manipulation,with legal governance improvements in regions where local protectionism is weaker effectively lowering corporate earnings manipulation;and improved local legal governance significantly enhances corporate ESG performance.These empirical evidences affirm,to a certain extent,the role of legal improvements in maintaining micro-economic operations.Third,the paper validates the adaptiveness and effectiveness of the legal system framework in guiding enterprises towards high-quality development.The research shows that perfection of the legal system aids in prompting companies to engage in structural optimization and competition enhancement in the market,helping businesses to achieve high-efficiency and high-value development.Based on China’s economic legal situation,the paper tests the efficacy of national legal policy reforms and expands the existing research regarding the influence of the rule of law on enterprises.The research results have profound implications for understanding how legal reforms can drive high-quality corporate development,while also offering policy recommendations and practical guidance,providing a reference for other developing countries. |
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