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Political Connections and Firm Pollution Behaviour: An Empirical Study

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Abstract

This paper uses Chinese data to examine the link between political connections and pollution discharge by firms. Our empirical results show that political connections are the institutional means by which firms acquire strategic pollution discharge protection. This situation may lead to inadequate enforcement of pollution control regulations. Government officials who are young, of low education, promoted locally, and in office for a relatively long time are more likely to build political connections with polluters. We find that the pollution discharge of politically connected firms also varies considerably due to firm heterogeneity. This study also shows that pollution protection effects caused by political connections are more evident in the Central and Western regions, and capital-intensive industries.

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Notes

  1. A parallel move, or lateral move, refers to the case of a mayor being transferred to another city or a new position at the same rank. This definition is consistent with that by Li and Zhou (2005) and Kanbur and Zhang (2009).

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Funding

This work was funded by the National Natural Science Foundation of China [Grant Number 71703035] and China Scholarship Council (File No. 201706135020).

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Authors and Affiliations

  1. School of Economics and Trade, Hunan University, Changsha, People’s Republic of China

    Yuping Deng & Helian Xu

  2. Economics, Business School, University of Western Australia, Perth, Australia

    Yuping Deng & Yanrui Wu

Authors
  1. Yuping Deng
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  2. Yanrui Wu
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  3. Helian Xu
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Correspondence to Yanrui Wu.

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Appendices

Appendix 1

See Table 5.

Table 5 Variable definitions
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Appendix 2

See Table 6.

Table 6 The estimation results to test Hypothesis 2b
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Appendix 3

See Table 7.

Table 7 Robustness checks: alternative measures of political connections
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Appendix 4

See Table 8.

Table 8 Endogeneity test on mechanisms of political connections influencing the environment
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Deng, Y., Wu, Y. & Xu, H. Political Connections and Firm Pollution Behaviour: An Empirical Study. Environ Resource Econ 75, 867–898 (2020). https://doi.org/10.1007/s10640-020-00410-7

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