Does the Responsibility System for Environmental Protection Targets Enhance Corporate High-Quality Development in China?

In 2017, China made an ambitious statement of high-quality development (HQD) with which to realize the goals of sustainability proposed by the United Nations. Our paper sheds new light on how the corporate high-quality development is affected by the responsibility system for environmental protection targets using a sample of energy-intensive firms from 2003 to 2018. We calculate the indexes for corporate high-quality development using entropy weighting for the five dimensions: efficiency, innovation, openness, greenness, and social responsibility. Then, we develop a difference-in-differences model to reveal that the responsibility system for environmental protection targets significantly dampens high-quality development of corporations, as the estimated coefficient is -0.0420 with a t-statistic of -2.9384. In contrast with private firms, the high-quality development of state-owned firms shows no significant correlation with environmental policy constraints. The efficiency of capital allocation by corporations mediates the effects of responsibility for environmental protection targets on high-quality development. Our study suggests several policy implications: first, understand the connotation of a high-quality development system, and formulate diversified regulatory policies. Second, the responsibility system for environmental protection targets in China should be implemented steadily within the firm's abilities. Next, the high-quality development of private firms should generate great attention. Finally, corporate internal governance should be designed to improve high-quality development.