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August 19, 2026SustainabilityOpen Access

Environmental Regulation and Firms’ Cross-Regional Investment: Evidence from China’s Air Ten Policy

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Authors

JLJintian LiLWLihua WangAWAijia Wang

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Overview

Difference-in-differences analysis reveals environmental regulation promotes cross-regional investment in listed firms, suggesting capability-driven expansion over pollution haven effects.

Key Points

  • To evaluate the impact of the Air Pollution Prevention and Control Action Plan on corporate cross-regional investment and uncover the underlying economic mechanisms.
  • Analyzed panel data from Chinese A-share listed firms from 2002 to 2024.
  • Estimated treatment effects using a multi-period difference-in-differences (DID) framework combined with propensity score matching (PSM-DID), placebo checks, and high-dimensional fixed effects.
  • The Air Ten policy significantly stimulated cross-regional corporate investment through enhanced green innovation capability, improved human capital quality, and regional industrial upgrading.
  • The positive investment effect was stronger among firms with higher R&D intensity, weaker internal controls, and those situated in eastern China.
  • No evidence indicated that cross-regional expansion was driven by pollution relocation, providing empirical support for the Porter hypothesis.

Cite This Study

Li et al. (2026) studied this question.

synapsesocial.com/papers/6a85639d03308d306e2d6dfchttps://doi.org/10.3390/su18168383
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