Effects of Environmental Audits on Green Development Efficiency: Evidence From China

ABSTRACT Although the literature has examined various factors affecting the efficiency of green development, there is a relative dearth of empirical studies quantitatively analysing the relationship between environmental audits and green development efficiency. Based on the environmental audit events carried out by the Chinese audit institutions, this study thus employs panel data of 283 China's cities for the period of 2003–2019 to explore the influence of environmental audits on green development efficiency, revealing estimation results that environmental audits significantly improve the green development efficiency. This beneficial effect is more pronounced in the eastern region, central region and non‐resource‐based cities compared with the western region and resource‐based cities. We also find that the pathways through which environmental audits influence this efficiency primarily involve innovations in green technologies and reductions in local government competition. The empirical results herein offer policy implications for China's environmental audit planning and environmental policy.