Research On The Impact Of Central Environmental Protection Inspector On Enterprise Performance

The rapid development of economy and society has not only enhanced our country’s economic strength,but also brought serious environmental pollution problems.Besides threatening residents’ health,environmental pollution such as air pollution,water pollution and soil pollution also become a key factor restricting the sustainable development of our country’s economy.The increasingly serious environmental pollution problem has attracted great attention from Chinese government departments.The Party Central Committee clearly put forward the Fivesphere Integrated Plan and put the construction of ecological civilization in a prominent position.Later,various government departments successively issued a series of policies and regulations,the system of ecological civilization construction has been gradually improved.In order to further strengthen the comprehensive environmental management,the Central Leading Group for Comprehensively Deepening Reforms conducted environmental inspections to the local party committee governments and relevant departments by sending a central environmental protection inspector(CEPI)team to various provinces(municipalities and autonomous regions),which is called the CEPI system.In the past,the targets of the environmental protection inspector were mainly polluting enterprises,while the targets of the CEPI have changed to provincial party committee governments and their related departments,as well as municipal party committees and governments.Through accountability,the CEPI team forced the local party committees and governments to truly implement the requirements of “party and government with the same responsibility,one party with double responsibility”,effectively solving the problem of inaction and chaos in the environmental pollution control process of China’s local government departments.Since its implementation in2015,the CEPI system has achieved great results in environmental pollution controlling.However,what is the impact of the CEPI on economic growth? Is it at the expense of economic growth in exchange for the improvement of environmental quality? Few literature discusses this.This article will take micro-enterprises as the research object to discuss the impact of the CEPI on enterprise performance and its micro-mechanism.Firstly,this article summarizes the relevant theories and literature of the CEPI and enterprise performance,points out the deficiencies in the current research,then put forward the problems that need to be studied in this article.Secondly,it briefly sorts out the policy background and system logic of the CEPI.Thirdly,discusses the mechanism of the CEPI on enterprise performance and the mechanism that various inspection methods affect enterprise performance,which lays the foundation for the subsequent empirical analysis of this article.Finally,with the aid of the quarterly statement data of2,362 listed industrial companies in China’s Shanghai and Shenzhen stock markets from the first quarter of 2014 to the fourth quarter of 2018 and the corresponding macroeconomic data,this article empirically tests the CEPI’s effect on enterprise performance by using the triple difference method(DDD).Our progress includes five parts: impact evaluation of the overall economic performance of the CEPI,the comparative evaluation of enterprise performance between the routine inspection and the “looking-back”,heterogeneity analysis,mechanism analysis and robustness test.The main conclusions of this paper are as follows.(1)The CEPI can effectively promote the performance of listed companies.Under the pressure of local government environmental regulations,enterprises have to improve the level of green technology innovation by transforming the way of production and operation and further,reduce the cost of environmental regulations.The improvement of the technology innovation brings environmental benefits to the enterprise and also brings economic benefits.(2)Compared with the routine inspection,the “looking-back” has a greater effect on the enterprise performance.The possible reason is that whether it is the regulatory pressure transmitted by the local government to the enterprise or the degree of damage to the corporate image caused by public reports and media exposure,“looking-back” is more than routine inspection.Companies have stronger incentives to reduce pollution emissions by changing their production and operation methods,which shows that corporate performance is more affected by “looking-back”.(3)The results of heterogeneity analysis show that there is no scale heterogeneity in the effect of routine inspections on corporate performance,while “looking-back” has scale heterogeneity,that is,large-scale enterprises are more affected by “looking-back”;neither routine inspection nor “looking-back” shows obvious ownership heterogeneity.This may be because the routine inspection is a comprehensive and multi-level inspection of the inspected area,while the “looking-back” is a check and acceptance of the rectification plan during the routine inspection.The high emission of large-scale enterprises determines that they are more easily inspected by the inspection team.(4)Mechanism analysis results show that whether it is routine inspection or “looking-back”,there is an innovation compensation mechanism and an agency cost mechanism between them and the performance of the enterprise,that is,the presence of the CEPI team can indirectly realizes the improvement of enterprise performance level by improving the technological innovation level of the enterprise and reducing the agency cost of enterprises.Based on the above results,this article proposes the following policy recommendations.(1)The governments should strengthen their environmental information disclosure and raise public awareness of environmental protection participation,broaden the channels for public participation in ecological environmental governance and keep them unblocked,strive to build a long-term mechanism for public participation in environmental governance.(2)For enterprises of different sizes,local governments should formulate differentiated environmental protection incentive policies based on local conditions,rather than adopting “one size fits all” measures.(3)The governments and the judiciary departments should improve the legal system of the CEPI,clarify the relevant subjects,rules and regulations,inspection procedures,responsibility mechanisms of CEPI,and strengthen the legalization of CEPI.