The Impact of Environmental Assessment on Corporate Financialization

This study examines the impact of environmental assessment on corporate financialization in China. Using panel data of A-share listed firms from 2008 to 2023, we exploit the staggered implementation of the Natural Resource Asset Audit for Leading Cadres as a quasi-natural experiment and employ a difference-in-differences (DID) model to identify the causal effects. The empirical results show that environmental assessment significantly promotes corporate financialization, and the findings remain robust after a series of robustness and endogeneity tests. Further analysis reveals that the policy reduces firms’ financing constraints, thereby encouraging a shift in resources from real investment to financial assets. Moreover, regional financial development and corporate digital transformation positively moderate this relationship, while the effect is more pronounced in eastern regions and among smaller firms.