Environmental Credit Constraints and the Enterprise Choice of Environmental Protection Behavior

Choosing appropriate environmental protection strategies is important in improving enterprises' economic and environmental performance. Based on the data of A-share listed enterprises from 2009 to 2019 in China, this paper uses the difference-in-differences model to identify the effects of environmental credit constraints on the enterprise choice of environmental protection behavior. We find that environmental credit constraints motivate some enterprises to choose active environmental behavior due to the incentive effect of environmental credit constraints on R&D investments. However, some enterprises may adopt evasive strategies because environmental credit constraints increase production costs and debt. State-owned enterprises prefer active environmental protection strategies to address environmental credit constraints, while private enterprises mainly adopt evasive strategies. Environmental credit constraints make high-interest and high-profitability enterprises choose active environmental strategies. Environmental credit constraints generated by enterprises' evasive environmental behavior increase the probability of litigation and arbitration cases, and environmental credit system construction in the short term may exacerbate unemployment, which the government needs to pay attention to when developing and implementing a blacklist system for environmental fraud. Although there are limitations in this paper in terms of research objectives and samples, the results are important for improving the environmental management system and the operating performance of enterprises.