Interaction between local environmental legislation and environmental court establishment: evidence from corporate carbon emissions in China

Abstract To enhance the supervision of regional environmental issues, China initiated a nationwide campaign in 2007 to establish environmental courts and formulate local environmental regulations. This study selected Shanghai and Shenzhen A-share listed companies from 2004 to 2021 as its research sample to examine the impact of local environmental legislation and the establishment of environmental courts on corporate carbon emissions. The findings indicate that the combined effect of these measures significantly curbs carbon emissions. Additionally, the study identifies that the intensity of local environmental court establishment and the implementation of corporate pollution charges or environmental protection taxes are critical mechanisms through which environmental legislation and court establishment reduce corporate carbon emissions. Finally, the interaction of environmental legislation and court establishment on corporate carbon emissions is most pronounced in regions where the government exhibits lower environmental concern, in state-owned enterprises, in enterprises located in the eastern region and in highly polluted cities.