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Does Green Credit Regulation Stimulate Earnings Management in Heavily Polluting Enterprises? A Quasi-natural Experiment from China

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posted on 2025-01-14, 02:34 authored by Fan Yong
Although green credit has become a crucial financial tool for promoting sustainable development worldwide, it may have unintended consequences, such as encouraging speculative behavior among heavily polluting enterprises. This study investigates the impact of the Green Credit Policy (GCP) on the use of accrual-based earnings management practices by heavily polluting enterprises in China. Leveraging panel data from listed companies in China, the results reveal a significant upward earnings management following the implementation of the GCP in 2012. The impact is more pronounced in companies with weaker internal control quality, lower cash flows, and greater financing constraints, as well as those audited by the Big Four auditing firms. The study also indicates that the GCP’s impact on earnings management is transmitted through profitability and reputation channels. The findings contribute to the understanding of the economic impact of GCP and have practical implications for the sustainable development of heavily polluting enterprises.

History

Table of Contents

Chapter 1: Introduction -- Chapter 2: Institutional Background and Hypothesis Development -- Chapter 3: Research Design -- Chapter 4: Results -- Chapter 5: Conclusions – References -- Appendix 1. Pollution-intensive Industry and Code -- Appendix 2. Variable Definitions -- Appendix 3. Descriptive Statistics -- Appendix 4. VIF Test -- Appendix 5. PSM-DID Match Result -- Appendix 6. Supplement to the Channel Test

Awarding Institution

Macquarie University

Degree Type

Thesis MRes

Degree

Master of Research

Department, Centre or School

Department of Applied Finance

Year of Award

2024

Principal Supervisor

Rui Xue

Additional Supervisor 1

Qing Zhou

Rights

Copyright: The Author Copyright disclaimer: https://www.mq.edu.au/copyright-disclaimer

Language

English

Extent

61 pages

Former Identifiers

AMIS ID: 380542

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