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Article

Environmental Regulation and Financial Performance in China: An Integrated View of the Porter Hypothesis and Institutional Theory

School of Business, Yonsei University, Seoul 03722, Korea
Sustainability 2020, 12(23), 10183; https://doi.org/10.3390/su122310183
Received: 3 November 2020 / Revised: 30 November 2020 / Accepted: 4 December 2020 / Published: 6 December 2020
(This article belongs to the Special Issue Banking, Corporate Finance and Sustainability)
The link between environmental regulations and financial performance has long been studied, but whether command and control environmental regulation or voluntary instruments induce better results is an unsettled question. By drawing on the Porter Hypothesis, this paper examines whether both approaches to environmental protection boost forms of environmental protection regulations that have positive impacts on financial performance. By integrating institutional theory, this study also examines whether ownership structures moderate the relationship between environmental regulation and financial performance. The results from data on 183 firms listed on the Shanghai and Shenzhen Stock Exchanges confirmed that both command and control environmental regulation and voluntary instruments positively affect financial performance. This paper also found that ownership structure strengthens the relationship between command and control environmental regulation and financial performance. The findings enrich the Porter Hypothesis and contribute to environmental research by revealing that properly designed environmental regulations have positive impacts on financial performance. By drawing on institutional theory, this study further contributes to business and management studies by confirming that the specific moderator, China’s state-owned enterprises, is a crucial contributor in achieving robust financial results. View Full-Text
Keywords: environment management; environmental regulation; porter hypothesis; institutional theory; financial performance environment management; environmental regulation; porter hypothesis; institutional theory; financial performance
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MDPI and ACS Style

Lee, E. Environmental Regulation and Financial Performance in China: An Integrated View of the Porter Hypothesis and Institutional Theory. Sustainability 2020, 12, 10183. https://doi.org/10.3390/su122310183

AMA Style

Lee E. Environmental Regulation and Financial Performance in China: An Integrated View of the Porter Hypothesis and Institutional Theory. Sustainability. 2020; 12(23):10183. https://doi.org/10.3390/su122310183

Chicago/Turabian Style

Lee, Eunmi. 2020. "Environmental Regulation and Financial Performance in China: An Integrated View of the Porter Hypothesis and Institutional Theory" Sustainability 12, no. 23: 10183. https://doi.org/10.3390/su122310183

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