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Quasi-experimental study demonstrates that environmental courts increase executive green compensation in firms, indicating stronger judicial oversight spurs green innovation.
This study examines the impact of environmental judicial specialization on the executive compensation green premium by leveraging the establishment of environmental courts in China as a quasi-natural experiment. The results show that environmental judicial specialization significantly increases the executive compensation green premium. Further analyses show that this effect is more pronounced among heavily polluting firms, those located in regions with stronger legal institutions and greater environmental attention, and those facing greater negative media attention. In addition, the executive compensation green premium following environmental court establishment is positively associated with firms’ subsequent green technological innovation. This study provides new evidence on how environmental judicial specialization reshapes corporate governance through executive compensation design.
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Wenting Fu (2026) studied this question.
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