The “Green Heaven” Effect of Voluntary Environmental Regulation: How Green Factory Construction Affects Corporate Capital Flows

Corporate capital flows (CCFs) are a key issue related to regional economic development and the effectiveness of environmental governance. Existing literature has identified the “pollution haven” effect induced by command-and-control environmental regulations, yet few studies examine whether voluntary environmental regulations produce similar effects. Taking green factory construction (GFC) as a quasi-natural experiment, this paper analyzes data on Chinese listed manufacturing corporations from 2010 to 2024 and reports the following findings. First, GFC generates a “green heaven” effect, boosting corporate capital flows to cities and industries where green factories are located. Second, the “green heaven” effect of GFC is more pronounced in less heavily polluting industries, technology-intensive industries, and corporations headquartered in non-eastern China. Third, the policy effects vary when policy shocks occur at corporate headquarters versus subsidiary locations. Policy shocks at corporate headquarters yield an investment-increment effect, whereas shocks at subsidiaries yield a capital flow effect. Fourth, the mechanism analysis suggests that GFC may promote CCF through two potential paths: optimizing corporate technological structure and labor structure. Fifth, further analysis indicates that the impact of GFC on CCF exhibits a wave-like decreasing trend as the distance between green factories and urban centers increases, with relatively large estimated effects appearing when green factories are located near the city center or at a distance of roughly 40–50 km. Sixth, GFC may not only affect corporations within the same industry but also generate spillover effects on corporations in other industries within the same city. This paper helps explain the patterns of corporate capital flows under voluntary environmental regulations and offers possible implications for refining environmental governance policies and for progress toward the Sustainable Development Goals.