From policy to valuation: how voluntary environmental regulation drives corporate value

Firms navigating the transition towards sustainable manufacturing face a critical strategic question: Can voluntary environmental regulation (VER) reconcile the tension between environmental compliance and market performance? Using Chinese A-share data from 2008 to 2024, this study treats the Green Factory Certification (GFC) Program as a quasi-natural experiment to examine the impact of VER on corporate market value. The results show that GFC significantly increases corporate market value. Mechanism analysis indicates that the policy mainly boosts market value through two paths: promoting green innovation and attracting green investors. Heterogeneity analysis reveals that policy benefits are more pronounced in labour-intensive, non-state-owned, non-heavy-polluting enterprises and in regions characterized by stringent environmental regulation and higher levels of economic development.