How Environmental Regulation Affects Corporate ESG Performance: An Empirical Study Based on the Compliance Cost Hypothesis

DOI

10.2991/978-94-6239-719-4_8How to use a DOI?

Keywords

environmental regulation; ESG; compliance costs

Abstract

As global environmental issues become increasingly severe, countries have introduced a series of environmental regulation policies to promote environmental protection. Using data from Chinese listed companies, this paper explores whether environmental regulation policies enhance corporate ESG performance. The empirical findings reveal that environmental regulation policies, instead, reduce corporate ESG performance. This is because environmental regulations increase corporate tax burdens and compliance costs, negatively impact corporate revenue and R&D investments. These findings align with the compliance cost hypothesis, which posits that environmental regulations increase production costs, reduce financial performance, and consequently hinder improvements in corporate environmental efficiency. Based on this, the paper recommends that environmental protection policies should be implemented gradually, without disrupting normal business operations and R&D decision-making, to sustainably achieve improvements in corporate environmental efficiency.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Jingwen Lu
PY  - 2026
DA  - 2026/07/09
TI  - How Environmental Regulation Affects Corporate ESG Performance: An Empirical Study Based on the Compliance Cost Hypothesis
BT  - Proceedings of the 2026 6th International Conference on Enterprise Management and Economic Development (ICEMED 2026)
PB  - Atlantis Press
SP  - 63
EP  - 69
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-719-4_8
DO  - 10.2991/978-94-6239-719-4_8
ID  - Lu2026
ER  -