Local government attention to green development and corporate pollution reduction

Zhang, Liguang and Yuan, Wanling and Yang, Ruoyi and Zhang, Genjie and Wang, Yunchen (2026) Local government attention to green development and corporate pollution reduction. ACTA OECONOMICA, 76 (3). pp. 453-483. ISSN 0001-6373

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Abstract

Local government attention to green development (LGAGD) can signal to firms about their work priorities and resource allocation, prompting them to implement more pollution-reduction actions. Taking the listed manufacturing firms in China from 2010 to 2020 as the research sample, this study employs textual analysis techniques to quantify LGAGD and examines how LGAGD affects firm pollution emissions. Our research indicates that LGAGD can substantially reduce firm pollution emissions. The underlying mechanism is that LGAGD can promote firm pollution reduction through enhancing green innovation and increasing environmental protection investment. Heterogeneity analysis reveals that the pollution-reduction effect of LGAGD is more significant in the eastern regions, in firms with high digitalisation levels, high levels of equity incentives, and in non-state-owned firms. This study not only expands the body of research on firm pollution reduction by introducing the novel lens of LGAGD, but also offers policy insights for nations aiming to foster environmentally sustainable business practices.

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