Environmental Regulation, Green Technology Innovation and Enterprise Risk Exposure —— An Empirical Study Based on Heavy Pollution Industries in China

With the rapid economic development in China, the problem of environmental pollution is becoming more serious. The government balances economic growth and environmental protection by implementing environmental regulations. Taking the listed companies in China A-share heavily polluting industries from 2009 to 2021 as samples, this study empirically investigates the influence mechanism of environmental regulation on business risk exposure and focuses on the regulatory role of green technology innovation. The results show that the increase in environmental regulation intensity significantly increases the stock price volatility of heavily polluting enterprises and worsens their operating conditions. However, green innovation in enterprises in the past can alleviate the aggravating effect of environmental regulation on stock price volatility to a certain extent. In addition, environmental regulation has significantly inhibited the green innovation behavior of enterprises in the short term. Further heterogeneity analysis shows that environmental regulations affect private enterprises more significantly.. This paper provides a reference for the government to formulate environmental policies through empirical research. The government should pay attention to the short-term inhibitory effect on green innovation of enterprises and formulate supporting incentive policies. It also provides a decision-making basis for enterprise managers to actively carry out green innovation to reduce business risks and achieve sustainable development.