Signalling effect of anti-corruption campaign on corporate green development in China

The question of whether anti-corruption campaign contributes to promoting green development is a hotly debated and controversial topic in academic circles. This study uses the China’s 2012 ‘eight-point regulation’ as an exogenous policy shock and uses data derived from China’s tax surveys and patent databases from 2006 to 2017. A multi-period Difference-in-Differences (DID) model is employed to examine the impact of China’s anti-corruption campaign on firm green development and its underlying micro-mechanisms from the dual perspectives of economic and environmental performance. The study finds that (1) the anti-corruption campaign promoted corporate emissions reduction without sacrificing efficiency, thus supporting green development, and that (2) there exists a significant signalling effect within the transmission mechanism of the anti-corruption campaign, which promotes the corporate green development by strengthening environmental regulation enforcement, optimizing resource allocation and stimulating technological innovation. This study also shows that (3) the anti-corruption campaign has more significant impacts being observed in enterprises with high emission intensity, low technological advancement, a large scale, and non-state-owned enterprises, as compared to others.The empirical evidence provided by this study offers valuable insights for the Chinese government to use in promoting green development by fostering a new type of ‘friendly and clean’ political – business relationship.