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Leveling Up Your Green Mojo: The Benefits of Beneficent Investment

Using a manually collected project-level dataset and exploiting the staggered designation of the major cities for environmental protection (MCEP) scheme in China, the authors show that firms increase their environmental investments after their city experiences heightened pollution prevention and control by the government. The effect is mostly driven by “beneficent investments” – environmental projects that not only benefit the firm but also directly spill over to society at large. Following the establishment of the MCEP, media coverage on environmental issues in local cities increases. City officials are more likely to be promoted if they meet pre-set environmental targets or reduce pollution. Firms spending more on green investments pay less in taxes, garner more subsidies, and secure more bank loans. MCEP cities with larger corporate environmental spending reduce pollution and improve local employment to a greater extent. They also attract more high-quality new firms. Heavily polluting firms contribute less to the city’s tax revenue and speed up their expansion to non-polluting industries. Firms investing more on environmental projects – especially the beneficent ones – have larger value gains, produce more green patents, and experience greater labor productivity than other firms in the same MCEP city. The authors' findings highlight the role of regulatory mechanisms in enabling E&G investment to be both value- and welfare-enhancing.


19
Jan
2023
Thursday

Session Chair: Jun PAN
Professor of Finance and SAIF Chair Professor, Shanghai Advanced Institute of Finance, Shanghai Jiao Tong University and Senior Fellow, ABFER

10:00 am
Leveling Up Your Green Mojo: The Benefits of Beneficent Investment

Xiaoyun YU, Professor of Finance, Shanghai Advanced Institute of Finance, Shanghai Jiao Tong University

Co-authors:
Xiting WU, Assistant Professor of Finance, Shandong University
Jiaxing YOU, Professor of Finance at the School of Management, Xiamen University
Clara ZHOU, Associate Professor, Department of Applied Finance, Macquarie University
10:25 am
Discussion
Discussant:
Laura STARKS, George Kozmetsky Distinguished University Chair and Professor of Finance, McCombs School of Business, University of Texas at Austin
10:50 am
Q&A
11:10 am


Updated 19 Jan 2023

Speakers

  • Xiaoyun YU

    Xiaoyun YU

     

    Professor of Finance, Shanghai Advanced Institute of Finance (SAIF), Shanghai Jiao Tong University and Fellow, ABFER

    Xiaoyun YU is a Professor of Finance at the Shanghai Advanced Institute of Finance (SAIF), Shanghai Jiao Tong University. Her research interests are in the areas of theoretical and empirical corporate finance, with a focus on information economics, corporate governance, IPOs, financial institutions, and political economy of finance. She has presented her research at major conferences around the world and has published in leading academic journals. Her work has won many research awards and has been featured in various media outlets. She is a research member of the European Corporate Governance Institute (ECGI) and a fellow of the Asian Bureau of Finance and Economic Research (ABFER). Prior to joining the SAIF, she was a Professor of Finance and Arthur M. Weimer Faculty Fellow at the Kelley School of Business, Indiana University.

  • Laura STARKS

    Laura STARKS

     

    George Kozmetsky Distinguished University Chair and Professor of Finance, McCombs School of Business, University of Texas at Austin and Senior Fellow, ABFER

    Laura STARKS is the George Kozmetsky Centennial Distinguished University Chair and Professor of Finance at the McCombs School of Business, University of Texas at Austin, where she teaches graduate and undergraduate courses on sustainable finance. Her current research focuses on sustainable finance issues, including climate finance and board diversity, as well as individuals’ financial decisions. She has won many awards for her research and teaching, including the 2021 Moskowitz Prize for outstanding research in sustainable finance. She is Research Associate of the NBER, Research Member for the ECGI, and Senior Fellow for ABFER. She is President of the American Finance Association and has previously served as President of the SFS, WFA and FMA. She has held a number of editorial positions including Editor of the Review of Financial Studies. She has served on mutual funds’ boards of directors, pension fund advisory committees, and advisory committees for the Norwegian Government and NBIM. She currently serves on advisory boards or committees for AIF Global, FTSE-Russell, Kroner Center for Financial Research, and PRI (Principles of Responsible Investing), where she is also Vice-Chair.

  • Jun PAN

    Jun PAN

     

    Professor of Finance, Shanghai Advanced Institute of Finance (SAIF), Shanghai Jiao Tong University and Senior Fellow, ABFER

    Jun PAN is currently a Professor of Finance and SAIF Chair Professor at Shanghai Advanced Institute of Finance (SAIF), Shanghai Jiao Tong University. Prior to joining SAIF in 2019, she was the School of Management Distinguished Professor of Finance and Professor of Finance at MIT Sloan School of Management. Jun has a B.S. degree in Physics from Shanghai Jiao Tong University, a Ph.D. in Physics from New York University, and a Ph.D. in Finance from Stanford University.

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Session Format

Each session lasts for 1 hour 10 minutes (25 minutes for the author, 25 minutes for the discussant and 20 minutes for participants' Q&A). Sessions will be recorded and posted on ABFER's web, except in cases where speakers or discussants request us not to.

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