Research On The Impact Of Environmental Pollution Liability Insurance On The Stability Of Share Prices Of Heavily Polluting Enterprises

With the continuous improvement of industrialisation,China has become more and more aware of the importance of environmental protection.Under the background of green finance,environmental pollution liability insurance has come into being,which is a kind of insurance that provides compensation for the liability that an enterprise has to bear due to an environmental pollution accident.For heavily polluting enterprises,environmental pollution liability insurance can not only diversify the environmental risks they face,but also play a role in external supervision,monitoring the daily operation of enterprises to reduce the occurrence of environmental pollution accidents,thus playing the purpose of protecting the environment and maintaining social stability.However,the development of environmental pollution liability insurance in China is still imperfect,and the construction of an environmental pollution liability insurance system is a long way off,requiring the joint efforts of government departments and insurance companies.In order to explore the potential role of environmental pollution liability insurance and improve the enthusiasm of enterprises to take out insurance,this paper explores whether environmental pollution liability insurance can have a positive impact on the stability of the share price of heavily polluting enterprises and play a role in reducing the risk of the capital market from a micro perspective,giving a deeper meaning to environmental pollution liability insurance.The main research content of this paper includes: firstly,introducing the background of this paper and the significance of the research,analyzing the mechanism of environmental pollution liability insurance affecting share price stability on the basis of reading relevant literature at home and abroad,and arguing that environmental pollution liability insurance may further affect share price stability by influencing the level of corporate governance,the degree of financing constraints and the development of the real economy,and proposing the research of this paper on this basis The hypothesis of this paper is to pave the way for the following empirical analysis.Secondly,the A-share listed heavy polluters are selected as the research sample for this paper,and a multi-temporal double difference model is established based on the pilot documents on environmental pollution liability insurance released by the official websites of the Department of Ecology and Environment of each province.The standard deviation of daily stock returns is selected as the explanatory variable to empirically analyse the relationship between environmental pollution liability insurance and share price stability,followed by robustness tests and mechanism analysis to verify whether the previous hypotheses are valid.Finally,further analyses are conducted to address the heterogeneous effects of environmental pollution liability insurance on share price stability and the effects of environmental pollution liability insurance on capital market risk as well as firms’ cross-provincial investment behaviour.Thirdly,the paper concludes that environmental pollution liability insurance can improve the share price stability of heavily polluting enterprises,and can influence share price stability through three mechanisms: the level of corporate governance,the degree of financing constraints and the development of the real economy;the impact of environmental pollution liability insurance on share price stability is more significant in regions with a higher level of legal system and a higher level of green financial development;environmental liability insurance can still have a significant impact on share price stability when considering cross-provincial investment.Environmental pollution liability insurance can reduce the systemic risk of the industry and play a positive role in the smooth operation of the capital market.Finally,the paper makes suggestions on the development direction of environmental pollution liability insurance,providing reference for the government to establish laws and regulations related to environmental pollution liability insurance and for insurance companies to design environmental liability insurance products.The main innovations of this paper are: firstly,this paper chooses a new perspective of stock price stability to study environmental pollution liability insurance,and investigates whether environmental pollution liability insurance can contribute to the reduction of capital market risks,giving a realistic meaning to environmental pollution liability insurance and broadening the research boundary of the factors influencing stock price stability.Secondly,this paper adopts a multitemporal double difference model for empirical analysis based on the pilot policies of environmental pollution liability insurance issued by provinces,which breaks through the time span of existing literature on environmental pollution liability insurance and provides new ideas for subsequent research on environmental pollution liability insurance.Thirdly,in conducting the analysis of the impact mechanism,the paper focuses on the service of environmental pollution liability insurance to the real economy,tapping into the potential role that may exist for environmental pollution liability insurance and providing motivation for government departments and insurance companies to promote environmental pollution liability insurance.