Local governments’explicit constraint of environmental targets and enterprises’green development
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    Abstract:

    This paper examines the impact of local governments’explicit constraints of environmental targets on enterprises’green governance and green transformation. The disclosure of environmental targets in the government work report is used to measure local governments’explicit constraint on environmental protection, and green investments and green patents are used to measure enterprises’green development. Results show that enterprises significantly increase the level of green investment when local governments explicitly reveal their environmental targets. The mechanism analysis finds that local governments provide more green subsidies and strengthen environmental regulation after they reveal environmental targets, which are two important mechanisms that encourage local enterprises to increase green investment. Further, the above positive relationship is more salient when higher-level governments place greater emphasis on environmental protection, when the public has a stronger environmental awareness, when local governments face lower economic growth pressure, and when the firms are local state-owned enterprises. Finally, after local governments explicitly reveal their environmental targets, the local enterprises’environmental violations significantly decrease, their green innovation significantly increases, and the overall regional pollution level also significantly decreases. Overall, our paper suggests that the explicit environmental targets of local governments convey local government’s willingness and determination to implement environmental governance to the market, which reduces the uncertainty of local environmental policies, helps promote enterprises’green governance and transformation, and ultimately contributes to high-quality economic development in China.

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  • Online: May 29,2026
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