How does environmental legislation affect enterprise investment preferences? A quasi-natural experiment based on China's new environmental protection law

China's New Environmental Protection Law (NEPL) represents a significant shift from the traditional administration to environmental legalization. Polluting enterprises face more pronounced contradictions between short-term environmental compliance and long-term development. Therefore, based on the CNRDS and CSMAR databases, this paper uses the 2015 NEPL as a quasi-natural experiment to investigate the micro-effects and mechanisms of environmental legislation on firms' investment preferences and environmental performance. The main findings of this paper are as follows. (1) The implementation of the NEPL effectively promotes the key pollutant-discharge enterprises (PDEs) to increase similar financial and environmental investment, and furthermore, the endogenous financing attributes of short-term financial investments can also provide financing for long-term environmental investment. This is due to the "reservoir" motive and the improvement in the executives' environmental awareness and green attention. (2) The NEPL exhibits heterogeneous policy effects. The key PDEs with political connections are more concerned about environmental management and investment. However, the NEPL's positive impact on environmental investment is weakened in regions with high levels of environmental justice. (3) A shift in the key PDEs' investment structure triggers a series of economic and environmental effects, such as increasing their risk-taking capacity, reducing environmental uncertainty, and significantly improving green patents. This paper provides policy implications for the process of environmental legalization in China and other developing countries.