Regional Legal Environment, Green Investors, and Corporate Performance

Drawing on new institutional economics and upper echelons theory, this study examines how the regional legal environment affects corporate performance using Chinese A-share listed firms from 2014–2024. The results show that a stronger legal environment significantly improves ROA and ROE and remains robust across alternative estimations, performance measures, sample periods, and instrumental-variable tests. Mechanism analyses reveal that green investors and executive green cognition partially mediate this relationship by reducing information asymmetry and greenwashing risks and strengthening firms’ long-term green orientation. Intellectual property protection further reinforces the positive effect of the legal environment on performance. Heterogeneity analyses show stronger effects among heavily polluting firms, state-owned enterprises, and firms in more marketized regions. These findings clarify how legal institutions promote corporate value creation through green capital allocation and managerial cognition, offering implications for legal business environment reform and sustainable economic development.