Review Reports - The Impact of Environmental Protection Tax on Green Innovation of Heavily Polluting Enterprises in China: A Mediating Role Based on ESG Performance

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

Dear Sir

Thank you for your email. After evaluating this article, I think that the article has made some contributions. First, the reason for choosing a suitable topic, affirming the role of Environmental Protection Tax and Green Innovation for businesses. Second, the collected data has a clear origin. Third, the research method is suitable and some results are found and discussed by the authors.

Some comments for this paper as follows:

1/ Similarity index is still high, it is unacceptable to publish an article with up to 38% overlap, however, I think that reducing this index can be achieved thanks to the author's efforts, so the results depends on the revision and this should be checked before submission for the second review.

2/ The article summary is not completely complete, there should be information about sample size and research time.

3/ Introduction lacks many citations, leading to very weak arguments and the author should strongly improve this content. At the same time, there should be more structure of the study here and some important findings should be emphasized.

4/ Research hypotheses should be drawn in pictures to make it easier to follow.

5/ Explain more specifically about mediating variables, why this proposal is made, what research is based on it, what viewpoints are supported and the basis for the proposal.

6/ Re-number the table. Where is the source of data for the variables in table 3.1?

7/ The paper lacks of methodology, especially the techniques used in this study should be performed.

8/ Descriptive statistics must be based on original data.

9/ Explain why you used year Effect only for this paper. The reason behind this selection?

10/ Discussion should be further developed through comparisons to reaffirm the novelty of the research.

11/ Please check the endogeneity in the model.

Thank you

Comments on the Quality of English Language

A minor

Author Response

We would like to express our special thanks to the reviewer for their comments. Your professional input has greatly improved this article. We have made modifications based on your feedback, and the following are the replies.

Reply: Thank you for your suggestion. We made modifications in the revised version.

2/ The article summary is not completely complete, there should be information about sample size and research time.

Reply: Thank you for your suggestion. We have made modifications and supplemented the research time and sample information.

Reply: Indeed, as the reviewer pointed out, we lacked citations in the introduction section. In the revised version, we have added references to enhance the persuasiveness of this article.

4/ Research hypotheses should be drawn in pictures to make it easier to follow.

Reply: We have added a picture section to the hypothesis section for easier understanding.

5/ Explain more specifically about mediating variables, why this proposal is made, what research is based on it, what viewpoints are supported and the basis for the proposal.

Reply: We have rewritten section 3.1.3 of the article, which focuses on our mediating variable ESG performance. We have rephrased the wording to explain why ESG plays a mediating role and added references.

6/ Re-number the table. Where is the source of data for the variables in table 3.1?

Reply: Considering that our previous statements may not have been clear enough, we have added explanations about the data in section 3.3.1.

7/ The paper lacks of methodology, especially the techniques used in this study should be performed.

Reply: We did not express the method clearly enough before, so we further supplemented the explanation about the method.

8/ Descriptive statistics must be based on original data.

Reply: Thank you for your reminder. In the previous version, in order to facilitate readers' understanding of our core variables, we included the processed DID, treat, and post data in the descriptive statistics section of Table 4.1. Based on the reviewer's comments, we should have included the original data. We have revised this in the revised version and removed the processed data.

9/ Explain why you used year Effect only for this paper. The reason behind this selection?

Reply: The year variable can capture the common time trend of all companies during the research period. Even without environmental protection taxes, the green innovation behavior of enterprises may naturally change over time, such as due to factors such as technological progress, changes in market demand, and changes in policy environment. If the year is not controlled, these common time trends may be mistaken for the impact of environmental protection taxes, leading to estimation bias. In addition, during the research period, other external shocks that may affect corporate green innovation may occur (such as the introduction of new environmental regulations, intensified market competition, etc.). By controlling the year, the impact of these external shocks can be partially eliminated, ensuring that the observed effects better reflect the actual impact of environmental protection taxes.

10/ Discussion should be further developed through comparisons to reaffirm the novelty of the research.

Reply: Thank you for your suggestion. In the discussion section of the article, we further compared relevant studies to highlight the novelty of this article.

11/ Please check the endogeneity in the model.

Reply: Thank you for your reminder. We have added explanations on omitted variables, sample selection, and endogeneity caused by reverse causality in sections 3.3.1 and 4.3.1 of the article.

Thank you again for your professional opinion. We have made a lot of revisions based on your feedback. Thank you very much and wish you a happy life.

Reviewer 2 Report

Comments and Suggestions for Authors

In my opinion, this manuscript is suitable as a study for graduate and undergraduate students in China.

Tittle

-- “Enterprises” in the tittle should be “Heavily Polluting Enterprises in China”

Abstract

--"This paper selects the listed companies” should be “This paper selects the listed heavily polluting enterprises” which is more accurate.

--“strategic green innovation rather than substantive green innovation”, each of them should be explained briefly.

--Recommendations should be written in the abstract.

Keywords:

-- “Heavily Polluting Enterprises” should be added into the keywords.

Introduction

-- Line 115-116, “First, China has a large number of heavily polluting enterprises” is improper. Suggest it be written as “First, China’s heavily polluting enterprises is in the critical period of transformation and upgrading”

-- Line 134-150, “The possible innovations of this article are as follows: Firstly, the novelty of this paper lies in its research topic.” This research topic is not a novelty as it has many literatures.

2. Literature Review

-- Line 160-161, there should be a paragraph on the reason of the 3 sections in the literature review. “2.1. Environmental Protection Taxes and Green Innovation”, “Environmental Protection Tax and Corporate ESG Performance”, “Corporate ESG Performance and Green Innovation”

-- Line 249, "domestic and foreign scholars”, the address of this paper is “University of Manchester”, so the domestic means England???

-- Line 273-275, Secondly, there is no consensus in the academic community 273 regarding the role of environmental protection tax in corporate 274 green innovation. I think the authors cannot solve this problem either. It should not be a reason to write this paper.

3. Research Hypotheses and Research Design

-- Line 397-423, “3.1.3. Mediating Effects of Corporate ESG Performance”, this section shows the relation between ESG information disclosure and corporate green innovation, but the mechanism on the effect of environmental protection taxes on green innovation is not clear.

-- Line 430, “Deng [46]” is not correct.

4. Empirical Analysis and Results

5. Conclusion and Recommendations

-- Section 4 and 5 are not closely related enough. The conclusion should be matched with the reference.

6. English

-- The paper is meet the express of Chinese yet not English.

Comments on the Quality of English Language

The paper is meet the express of Chinese yet not English.

Author Response

Thank you very much for your professional opinion. We have made modifications based on your feedback. The following is the specific response.

Tittle

-- “Enterprises” in the tittle should be “Heavily Polluting Enterprises in China”

Reply: Thank you for your suggestion. We have revised the title.

Abstract

--"This paper selects the listed companies” should be “This paper selects the listed heavily polluting enterprises” which is more accurate.

Reply: Thank you for your suggestion. We have made revisions based on your suggestions.

--“strategic green innovation rather than substantive green innovation”, each of them should be explained briefly.

Reply: Thank you for your reminder. Indeed, in previous versions, we lacked explanations for strategic green innovation and substantive green innovation. Therefore, in the revised version 4.4.1, we have added explanations for both.

--Recommendations should be written in the abstract.

Reply: Suggest that enterprises improve their green innovation system and enhance the quality of ESG information disclosure; The government is improving the system of environmental taxation and ESG information disclosure; Enhance public awareness of environmental protection and exercise supervision over energy supply.

Keywords:

-- “Heavily Polluting Enterprises” should be added into the keywords.

Reply: Thank you for your suggestion. We have added the keywords.

Introduction

Reply: Thank you for your suggestion. The modifications have been made according to your suggestions.

Reply: Thank you for your suggestion. We have reorganized the possible contributions of this article.

Literature Review

Reply: Thank you for your suggestion. We have added an explanation on why literature review is conducted from these three aspects in line 161.

-- Line 249, "domestic and foreign scholars”, the address of this paper is “University of Manchester”, so the domestic means England???

Reply: Thank you for your suggestion. We have revised this confusing statement.

Reply: We have removed this statement based on the reviewer's suggestion.

Research Hypotheses and Research Design

Reply: Thank you very much for your suggestion. We have rewritten paragraph 3.1.3.

-- Line 430, “Deng [46]” is not correct.

Reply: We have made revisions to this statement.

Conclusion and Recommendations

-- Section 4 and 5 are not closely related enough. The conclusion should be matched with the reference.

Reply: Thank you for your suggestion. We have rewritten the conclusion and recommendations section of Chapter 5, hoping that it will be more closely related to the previous results.

English

-- The paper is meet the express of Chinese yet not English.

Reply: Thank you for your suggestion. We have once again adjusted the language expression in this article.

Thank you again for your professional feedback, which has helped us improve this article. We wish you a happy life.

Reviewer 3 Report

Comments and Suggestions for Authors

The paper “The Impact of Environmental Protection Tax on Green Innovation of Enterprises: A Mediating Role Based on ESG Performance”, by Yihui Duan and Amir Rahbarimanesh, investigates the impact of the implementation of the Environmental Protection Tax Law on green innovation in heavily polluting enterprises using the difference-in-differences method. It selects the listed companies on the Shanghai and Shenzhen stock exchanges from 2014 to 2022 as the research sample, and takes the implementation of the Environmental Protection Tax Law in 2018 as a quasi-natural experiment.

The research finds that the levy of environmental protection tax is beneficial for improving the level of corporate ESG (environmental, social, and governance) performance, thereby enhancing the green innovation capability of heavily polluting enterprises.

It is shown that the impact of environmental protection tax on enterprises of different natures and scales varies significantly. Compared to non-state-owned enterprises, environmental protection taxes have significantly increased the level of green innovation in state-owned enterprises. Compared to small-scale enterprises, environmental protection taxes have significantly increased the level of green innovation in large-scale enterprises. In addition, corporate ESG performance plays a mediating role in the process of the impact of environmental protection taxes on green innovation in heavily polluting enterprises.

The paper contains new results, which can be interesting for specialists in application of econometric methods to the environmental pollution control. One can recommend the paper for publication.

Author Response

Thank you very much for recognizing our work. We wish you a happy life.

Round 2

Reviewer 1 Report

Comments and Suggestions for Authors

The paper is much better. Thank you

Comments on the Quality of English Language

A minor

Author Response

Thank you very much for your feedback and recognition of our work. We wish you a happy life.

Reviewer 2 Report

Comments and Suggestions for Authors

The detailed response to my last report is satisfactory, but the percent match of wording duplication in the manuscript is too high.

Comments on the Quality of English Language

Extensive editing of English language required.

Author Response

Thank you very much for your feedback and recognition of our work. Based on your suggestions, we have adjusted the language expression again. Please refer to the highlighted paragraph in the Word document for details. We wish you a happy life.