Do environmental regulations affect corporate investment preferences? Institutional considerations based on fiscal decentralization

Environmental regulation( Er ) structurally shapes enterprise investment strategies under China's fiscal decentralization( Fd ) system. Employing dynamic panel data from 2008-2022 listed industrial firms, this study focuses on three aspects: (1) Developing a tripartite framework to reveal how Er amplifies technology investments( Ti ) and financial investments( Fi ), while suppressing productive investments( Pi ) through executive risk preferences and environmental concerns; (2) Higher Fd diminishes the promotion effects of Er on Ti and Fi, and alleviates its constraints on Pi ; (3)Market-oriented E r influence all three investment types,whereas command-based Er only affect Ti ; (4) Heterogeneous effects covers types of spatial economic and market characteristics, industrial technology attributes and enterprise financial resource endowments to identify differential drivers across institutional and contextual dimensions. This study examines how central-local conflicting environmental governance goals influence enterprise investment decisions under fiscal decentralization, provides an empirical basis for reconstructing the theoretical model of institutional pressure and strategic response. • Design a tripartite investment decision model encompassing productive investment, technological R&D, and financial assets. • The environmental regulations exert structural impacts on enterprise capital allocation through executive risk preferences and environmental concerns. • The allocation of governance responsibilities between central and local governments under fiscal decentralization moderates enterprise investment within a unified institutional framework. • Heterogeneity analysis incorporates regulatory instruments, spatial-economic characteristics, market attributes, industrial traits, and enterprise financial resource endowments to identify institutional and contextual drivers.