In light of China’s implementation of the Environmental Protection Tax Law (EPT Law) on 1 January 2018, this paper empirically investigates the influence of environmental regulations on the investment behaviour of heavily polluting firms using a difference-in-differences (DID) model. The EPT Law is found to improve the investment efficiency of heavily polluting firms by restraining overinvestment, an effect that applies mainly to private firms, particularly those with no political affiliations. This paper enriches the existing research on the ...
