Does State Ownership Undermine the Environmental Payoff of Corporate Green Investment? Evidence from China’s Listed Manufacturing Firms

Against the backdrop of China’s dual-carbon strategy, a growing literature documents that corporate green investment improves financial outcomes, yet whether it produces genuine environmental improvement remains contested. This study shifts the analytical lens from financial to ecological returns: drawing on a panel of Chinese A-share listed manufacturing firms over 2014–2023, we examine how green investment affects corporate environmental performance—proxied by the Environmental (E) pillar of ESG ratings—and whether state-owned shareholding moderates this relationship. To address endogeneity and unobserved heterogeneity, we estimate a dynamic panel model via two-step difference GMM. The results show that green investment significantly raises environmental performance, but that state ownership attenuates this effect. We interpret the main effect as operating through direct pollution and resource-use reduction, lower regulatory-compliance risk, and improved environmental disclosure, whereas in state-owned enterprises institutional frictions—political multi-tasking, soft budget constraints, and weak environmental accountability—convert green capital into largely symbolic compliance, diluting its marginal environmental return. By recentring the analysis on an independent, third-party environmental measure that blends substantive environmental outcomes with the quality of environmental disclosure, this study examines the ecological efficacy of green investment and shows that ownership structure conditions not only profitability but also the realisation of environmental benefits. Robustness checks based on alternative estimators, lagged green investment, panel unit-root tests, and expanded GMM diagnostics corroborate the core positive effect of green investment; by contrast, an objective patent-based outcome does not respond to green investment within the sample window, indicating that disclosure-based and innovation-based measures of environmental performance capture distinct margins. These checks also clarify the conditions under which the moderating role of state ownership is statistically significant.