Environmental protection tax and corporate carbon emissions in China: a perspective of green innovation

The environmental protection tax (EPT) reform is a major strategic measure to further implement green development and is the most important environmental economic policy in China. Using data from 3339 companies listed on the A-shares in China's Shanghai and Shenzhen from 2006 to 2021, this paper evaluates the policy impact of the EPT on corporate carbon emissions and its internal mechanism from the perspective of green innovation by the DID method. The results show that EPT reform effectively promotes corporate carbon emission reduction, and the conclusion remains valid after robustness tests such as the DDD and DML method. The EPT reform mainly promotes carbon emission reduction in companies with high executive compensation levels and high environmental information disclosure, and mature companies. Furthermore, the EPT reform promotes enterprises to reduce carbon emissions by forcing them to adopt strategic and endpoint green innovation, and this "forcing" effect is mainly reflected in internal incentives and external pressure. Graphical Abstract