Effect of political connection on corporate environmental investment: evidence from Chinese private firms

This paper investigates the effect of political connections on corporate environmental investment. Using the survey data gathered from Chinese private firms, we find that political connection is significantly positively associated with environmental investment. The results are still valid after using Heckman two-stage approach and propensity score matching method to mitigate endogenous problems. Furthermore, we find the positive role of political connection in environmental investment is more pronounced for the firms joining the government-controlled business association, namely the All-China Federation of Industry and Commerce (ACFIC).