Media coverage, Environment Protection Law and environmental research and development: evidence from the Chinese-listed firms

Environmental research and development (R&D) is an effective means to coordinate firms' sustainable development and environmental protection. This study investigates the impact of media coverage on environmental R&D with the Environmental Protection Law's exogenous shock in 2015 in China. The results show that both media coverage and the Environmental Protection Law significantly promote firms' environmental R&D. Moreover, the Environmental Protection Law strengthens the positive effect of media coverage on firms' environmental R&D, and the strengthening effect is more significant for firms with low internal control quality and in high-competition industry. Further researches suggest that environmental R&D fully mediates the relationship between media coverage and environmental technology innovation, while the Environment Protection Law has no significant effect on environmental technology innovation. The results demonstrate external supervision or regulations are conducive to environmental R&D, which conforms to Porter Hypothesis. This study has certain enlightening significance to firms' environmental R&D, environmental technology innovation, and sustainable development in developing economies.

Automated summary

The study reveals that both media coverage and the Environmental Protection Law have a significant positive impact on firms' environmental R&D, especially for firms with low internal control quality and in high-competition industry. Environmental R&D fully mediates the relationship between media coverage and environmental technology innovation.