Does green credit regulation induce managerial opportunistic behavior in heavily polluting enterprises? A quasi-natural experiment from China

This study investigates the Green Credit Policy's (GCP) impact on managerial opportunistic behaviors in China's high-pollution enterprises. Using data from Chinese listed firms, we find a significant increase in earnings management following the GCP's implementation in 2012. This impact is more pronounced in firms with weak internal controls, low cash flows, and severe financing constraints, as well as those audited by the Big Four firms. Further analysis reveals that profitability pressure and reputation concerns transmit the impact of GCP onto corporate earnings management. The findings uncover an unintended “dark side” of green credit regulation and provide policy insights for fostering genuine corporate sustainable development.