Under the Green Shield, Where Does Capital Go? The Impact of Biodiversity Conservation Policy on Corporate Cross‐Regional Investment

Based on panel data of Chinese prefecture‐level cities from 2009 to 2023, this paper employs a multi‐period difference‐in‐differences (DID) method to systematically evaluate the impact of the Green Shield Action on corporate cross‐regional investment and its underlying mechanisms. We find that enterprises will reduce the cross‐regional investment in the regions with Green Shield Action, namely the implementation of the Green Shield Action significantly inhibits corporate cross‐regional investment. Regarding the mechanisms, the Green Shield Action operates through two pathways: the cost burden effect and the institutional endowment effect. At the macro level, the Green Shield Action significantly intensifies local fiscal pressure, accompanied by notable increases in fiscal expenditure, environmental protection expenditure, and social security expenditure. At the micro level, the policy exacerbates corporate financing constraints and increases the tax burden on firms. Furthermore, the implementation of the Green Shield Action improves government‐business relations and enhances regional competitiveness; these factors collectively suppress corporate willingness to invest cross‐regionally. Heterogeneity analysis indicates that the inhibitory effect of the Green Shield Action on cross‐regional investment is more pronounced in regions with lower willingness to control pollution and lower levels of marketization.