Influence of zombie firms on normal corporate environmental investment.

Since China put forward its carbon neutrality goal, the issue of environmental governance has attracted increasing attention. When strengthening the supervision of enterprise pollution sources, environmental regulators often ignore the impact of zombie enterprises on environmental investment by normal enterprises. Taking China's A-share listed companies from 2010 to 2019 as research samples, this paper collected and analyzed the data of their environmental investment, and used the fixed effect model to explore the impact of the proportion of zombie companies in the industry on the environmental investment of normal companies and such impact's heterogeneity and mechanism. The results of this study showed that the proportion of zombie enterprises in the industry delivered a significant negative impact on the environmental investment of normal enterprises in the same industry by the following internal mechanism: Firstly, a higher proportion of zombie enterprises would exacerbate the financing constraints faced by normal enterprises and result in difficulties with their fund-raising, finally leading to the decline in environmental investment. The mediating effect of financing constraints was 13.97%. Secondly, the existence of zombie enterprises would distort the fair competition in the market, lead to vicious price competition and lower the profitability of normal enterprises, thus thwarting the environmental protection investment by normal enterprises. The mediating effect of profitability was 14.26%. Further research demonstrated that in the sample of non-state-owned enterprises, low-social-responsibility enterprises and heavily polluting enterprises, the negative effects of zombie enterprises on normal corporate environmental investment were more obvious. In the robustness test, the regression results were proved to be robust by different levels, different zombie enterprise identification methods and the measurement methods of enterprise environmental protection investment. Among them, the proportion of zombie enterprises in an individual province had a significant negative effect on the environmental investment of normal enterprises in the same province, showing that such negative impact existed not only at the industrial level, but also at the provincial level. Therefore, governments should pay attention to the negative impact of the existence of zombie enterprises on the environmental investment of normal enterprises, adhere to the principle of environmental regulation neutrality and establish a multi-level and diversified financial system. This approach can eliminate the policy environment on which zombie enterprises rely in their survival and gradually form a new pattern for steady economic growth and an increasingly perfect environment. From the perspective of dealing with zombie enterprises, this study provides some policy suggestions on improving environmental protection investment by normal enterprises. [ABSTRACT FROM AUTHOR]