The impact of environmental protection tax on green M&As

Abstract This article aims to investigate the impact of The Environmental Protection Tax Law of the People’s Republic of China implemented in 2018 on the decision-making process of green M&As, and incorporates heavy-polluting companies listed on the A-share market in Shanghai and Shenzhen in its study. After collecting data on the green M&As among these firms, the study empirically examines the impact of the environmental protection tax on their decision-making. The findings indicate that: (1)The environmental protection tax offers favorable conditions for enterprises to engage in green M&As.(2)From the perspective of heterogeneity, The environmental protection tax has a particularly evident incentive effect in green M&As of enterprises incorporated in regions with high tax standards, state-owned enterprises, and more heavily-polluting enterprises in central and western China.(3)Green M&As contribute to increased green innovation output by enterprises.(4)The moderating role of regional marketization and corporate legitimacy awareness in the impact of environmental protection taxes on green M&As. Based on these empirical results, several policy recommendations are proposed, including the effective utilization of the environmental protection tax system and the promotion of green transformation among enterprises through price mechanism.