Study On The Impact Of Public Environmental Demands On Green M&a Of Heavy Polluting Enterprises

In the report of the 20th National Congress,General Secretary Xi reiterated the importance of environmental governance to the realization of a beautiful China,pointing out that "blue skies and white clouds,green mountains and green water are the greatest capital for long-term development" and "a good ecological environment is the fairest public good and the most popular welfare of the people.The ecological environment caused by rapid economic growth is the most important factor in long-term development.The ecological and environmental problems caused by the rapid economic growth can not be delayed.The frequent occurrence of environmental problems has prompted people to reflect and rethink the relationship between human beings and nature,and has promoted the emergence of green governance.Green governance,which is branded as a "public service activity",should not rely on the coercive measures of one party only,but should involve the participation of multiple parties.It is undeniable that government-led administrative regulation and marketled market-incentive regulation have played a pivotal role in China’s environmental governance,but their limitations cannot be ignored.In view of this,the effectiveness of public-led informal environmental regulation in environmental remediation needs to be further explored by the theoretical community.The adoption of mergers and acquisitions to eliminate backward production capacity and transform polluting industries into clean production industries is an important means to implement the concept of green development and achieve energy reduction,quality improvement and efficiency.With the feedback from the capital and commodity markets,companies can convey their determination to acquire environmental technologies,release positive signals,and gain social recognition,maintain their reputation and legalize their management.With the storm of public opinion caused by public demands for environmental protection,do polluters prefer green M&A with an "eyecatching" effect? What are the mechanisms at play? These questions need to be explored theoretically and tested empirically.In this paper,we place environmental economics and financial behavior in the same research framework,and empirically examine the impact of public environmental demands on green M&A of heavily polluting firms in a benchmark sample of Shanghai and Shenzhen A-share listed firms from 2011 to 2021,analyzing the channel mechanisms and contextual change factors.Further,we explore the moderating effect of executives’ perceptions of "hometown identity" that shape corporate decision making and regional heterogeneity.The results show that,first,strong public pressure from public demands for environmental protection forces heavy polluters to make green M&A decisions to achieve green transformation.Second,the public opinion crisis created by the public’s environmental demands will feed back to the capital market,and polluters will adopt green M&A with "eyecatching" effect to prevent the stock price fluctuation caused by public opinion.Third,the pressure of public opinion on environmental protection demands forces the local government to intervene administratively to strengthen the importance of local environmental management and supervision,and heavily polluting companies tend to transform by green M&A in response to supervision and pressure for legality.Further analysis reveals that executives’ sense of "hometown identity" can complement public-led informal environmental regulation and promote green M&A behavior of polluting firms;regional heterogeneity tests reveal that public environmental demands are more effective in promoting green M&A decisions of polluting firms in central and western regions than in eastern regions.The results of the extensibility test show that the public environmental demands increase the preference for green M&A,which in turn increases the level of green innovation of polluting enterprises,with a more significant effect on green invention patents.After considering the endogeneity issue,the empirical results of this paper are still robust and reliable.This study provides theoretical evidence for the construction of a pluralistic cogovernance environmental system,the understanding of the bottom-up public participation mechanism in environmental governance,the dissection of the role of information transfer and capital market in environmental governance,and the acceleration of the greening process of enterprises and their long-term virtuous development.