Government Environment Attention and Firms' Subnational Migration in China: A Political Dependence Perspective

ABSTRACT Prior literature has mainly focused on cross‐country migration driven by the heterogeneous stringency of environmental regulations. Drawing upon the political dependence perspective, we propose that local governments expressing greater attention to environmental issues prompted firms to relocate subnationally. To test our hypotheses, we compiled a firm‐level longitudinal dataset composed of 970 Chinese publicly listed firms from 2012 to 2022 and traced their migration of manufacturing subsidiaries to other cities. By adopting the Poisson pseudo‐maximum likelihood models to account for count‐dependent variables with zero values, we found empirical support that when the local government's attention to environmental protection is greater, the likelihood of a firm's subsidiary migration will be higher. That is, our study suggests a new type of intra‐country pollution haven hypothesis (PHH) behavior triggered by firms' political considerations. Besides, such inclinations would be curbed by firms' incumbent political orientation and benefits, as manifested in the top executives' party membership and firms' receipt of government subsidies, respectively. This research enriches the PHH literature by highlighting subnational migration and heterogeneous firm responses to government attention from a novel political perspective. Our findings remind policymakers of the importance of ensuring standardized demands of environmental protection and political means that can bind firms' behaviors.