Environmental Protection Investment And Debt Financing Cost Of Enterprise

In recent years,many plans has been issued and implemented to prevent and control pollution by the State Council,which has made China’s ecological environment protection change from recognition to practice.The continuous development of pollution prevention and control work needs the government,enterprises and the public to co-operate,especially for heavy pollution industry enterprises,rapid development leads to serious environmental pollution,and it is duty bound for environmental pollution prevention and control work.In order to reduce pollution emissions,some enterprises actively invest in cleaning equipment and introduce wastewater treatment equipment to reduce pollution sources and improve treatment capacity.Therefore,as an important way to prevent and control environmental pollution,enterprise environmental protection investment will play an important role in the operation of enterprises.Debt financing is the main means of external financing for enterprises.However,due to their own size,profitability and government policy differences,there are differences in corporate debt financing activities.The cost of debt financing is the main aspect of debt financing,how to reduce it effectively is an inevitable focus of enterprises.In recent years,the green credit policy issued by the state links the environmental performance of enterprises with loans.Financial institutions have gradually incorporated the environmental performance of enterprises into one of the lending standards.Can the green advantages brought by environmental protection investment of enterprises bring financing advantages to enterprises?Can we enjoy relatively low financing cost in debt financing?Environmental pollution often occurs in heavily polluted industries.Therefore,based on the relevant theories,this paper takes the heavily polluted industries as samples,and considers that the environmental protection investment of enterprises can effectively improve the environmental performance of enterprises and decrease the cost of debt financing.The government is one of the important stakeholders that restrict the behavior of enterprises,the paper examines the regulatory role of government environmental subsidies and environmental regulations from two aspects of government incentive and supervision.The conclusions show that:(1)environmental protection investment can effectively decrease the cost of debt financing.That is,the more enterprises investment in environmental protection,the more they reduce the cost of debt financing.(2)Government environmental protection subsidies promote the negative correlation between environmental protection investment and debt financing cost.That is to say,the government’s environmental project subsidies encourage enterprises to invest in environmental protection,and then promote the reduction of debt financing costs.(3)Environmental regulation weakens the negative correlation between environmental protection investment and debt financing cost.When enterprises are faced with high environmental regulation,the compensation effect of environmental protection investment is less than the cost effect,and the reducing effect of environmental protection investment on debt financing cost will be weakened.In the further test,this paper examines the lag effect of environmental protection investment on reducing the cost of debt financing.Based on different investment perspectives,the contribution of cleaner production investment and pollution control investment in reducing debt financing cost is tested.Property right nature will affect the cost of enterprises debt financing,state enterprises and private enterprises are divided to test the difference in the environmental investment reduces the cost of debt financing.The empirical results show that the environmental protection investment of enterprises with two or four lag periods can significantly reduce the cost of debt financing.Although the clean production investment and pollution control investment have no notable effect on the reduction of debt financing cost in the next period,with the gradual introduction of clean investment into the production and operation of enterprises,cleaner production investment can significantly reduce the cost of debt financing.The contribution of reducing long-term debt financing cost is greater than that of pollution control investment,and the environmental investment of private enterprises have notable effect on reducing debt financing cost than that of state enterprises.Finally,this paper uses the PSM-DID method to test the policy impact of the promulgation of the"new environmental protection law",the conclusion is that the issuance of the "new environmental protection law" effectively reduces the cost of corporate debt financing.China’s enterprises,especially small scale and medium scale enterprises,are facing the problem of expensive financing,and the voice of the society calling on enterprises to strengthen environmental protection responsibility is getting higher and higher.If the enterprise effectively reduces the cost of debt financing by fulfilling its environmental responsibility,it will play a positive role in relieving the plight of enterprise financing expensive and promoting the distribution efficiency of capital market.The contributions are as follows:firstly,the paper explores the relationship between environmental protection investment and debt financing,and the long-term effect of environmental protection investment is further explored.After distinguishing different types of environmental protection investment,it specifically tests which kind of environmental protection investment makes more contributions on reducing cost of debt financing,it enriches the factors affecting the cost of debt financing and expands the microeconomic effect of enterprise environmental protection investment Fruit.Secondly,considering the regulatory role of government work from two aspects of government supervision and government incentive,the transmission mechanism between causal variables is further studied.Thirdly,this paper studies the policy effect of the new environmental protection law on reducing the cost of debt,which enriches the policy research on the new environmental protection law in the existing literature.