An empirical study on the institutional factors of energy conservation and emissions reduction: Evidence from listed companies in China

Corporate excessive energy consumption and emissions are negative externality problems, with the basic countermeasure of establishing a series of institutional programs to promote corporate energy conservation and emissions reduction. This paper analyzes the influence of institutional factors such as laws, tax policies, credit policies, government subsidies, media supervision and marketization degree on corporate energy conservation and emissions reduction from the institutional perspective. The data, from 84 listed Chinese chemical and steel companies from 2006 to 2010, was analyzed using both a fixed effect model and the generalized method of moments (GMM) model. The empirical results demonstrate that these institutional factors positively affect corporate energy conservation and emissions reduction. Specifically, four factors – tax policies, government subsidies, credit policies and media supervision – have a significant positive relationship with corporate energy conservation and emissions reduction; whereas laws and marketization degree exhibit no significant effects. The research findings are theoretically and practically significant to the Chinese government with regard to improving the institutional environment and promoting corporate energy conservation and emissions reduction.