[author]Wang F. et al.
Wang Fengrong, Professor, School of Economics, Shandong University;
Abstract: Seeking effective mechanisms to solve the increasingly serious environmental pollution problem is a consensus in both practical and theoretical circles. Can the study of environmental judicial strengthening promote green growth of enterprises and become an effective mechanism for environmental governance? Based on the data of M&A events of listed companies from 2003 to 2020, and taking the establishment of China's environmental protection court as a quasi Natural experiment, this paper uses the double difference model to study its impact on enterprises' extensional green growth green M&A. The study found that the establishment of the environmental protection court of the Intermediate people's court rather than the environmental protection court of the High people's court helped promote green mergers and acquisitions of enterprises. Mechanism testing found that the establishment of environmental protection courts has improved judicial punishment and credibility, enhanced public awareness of environmental protection, and thus formed environmental constraints on enterprises. Further testing found that green mergers and acquisitions have a green integration effect and improve the green performance of enterprises. Compared with other governance models, green mergers and acquisitions have a long-term impact on corporate environmental governance and can achieve a "win-win" situation between the environment and the economy. However, the macro transformation effect of green governance needs to be improved.
Keywords: Environmental Court; Green mergers and acquisitions; Judicial strengthening; environmental awareness
In recent years, with the frequent occurrence of a series of pollution incidents that endanger human health, such as air and water pollution, environmental protection issues have become a focus of attention from all sectors of society. Since the promulgation of the Environmental Protection Law of the China in 1989, environmental protection regulations have been issued in various places. In 2015, the new Environmental Protection Law of the China was officially implemented. The Fourth Plenary Session of the 19th Central Committee of the Communist Party of China clearly proposed to "implement the strictest ecological environmental protection system", and the ecological environmental protection Substantive law has been relatively complete at present. However, issues such as loose environmental regulations and lax enforcement seriously constrain the effectiveness of environmental legislation. In order to strengthen the construction of environmental judicial capacity and ensure that environmental governance not only has laws to follow, but also has laws to follow, environmental courts have emerged as an exploratory institutional innovation. In 2007, the Environmental Resources Tribunal of Qingzhen People's Court, the first environmental protection court in China, was established to solve the pollution control problem of Hongfeng Lake in Guizhou Province. In 2014, the Supreme People's Court established a specialized Environmental Resources Trial Chamber to guide and supervise national environmental cases, formulate unified standards, and improve the professionalism and execution efficiency of environmental justice, marking a new journey in the development of environmental justice in China. In combination with the white paper "China's Environmental Resources Trial" issued by the Supreme People's Court and the author's manual sorting, the establishment of the Environmental Resources Tribunal of the High people's court and the Intermediate people's court is shown in Figure 1.
Figure 1: Historical Trends of the Establishment of the Environmental Protection Court of the Chinese High Court
In the context of strengthening environmental justice, as the main body of pollution prevention and control, enterprises' behavior will be affected in various aspects. Overall, if enterprises do not seek green growth transformation in a timely manner to meet legitimacy standards, the likelihood of facing environmental pollution lawsuits will increase, and their potential litigation costs, management costs, and pollution penalties will also increase. On the one hand, the strengthening of environmental justice has strengthened the punishment and credibility of the judiciary, making the environmental protection system a "hard constraint" for enterprise development; On the other hand, environmental courts have improved citizens' environmental awareness through judicial innovations such as media promotion and legal education, leading to a "reputation crisis" for polluting enterprises and imposing "soft constraints" on their development. In order to meet environmental regulatory requirements, enterprises may impose production restrictions, reduce production, or increase investment in technological innovation when supporting resources are insufficient. However, reducing production scale is only an emergency measure for enterprises, and technological innovation has significant uncertainty. In contrast, green mergers and acquisitions introduce other companies' green concepts, governance technologies, and management methods for green transformation, which has the advantages of short cycle, fast effectiveness, and high safety. In addition, green mergers and acquisitions, as a positive environmental signal, can also convey the willingness of enterprises to assume social responsibility to the public, enhance their "green reputation", and meet the demands of relevant stakeholders.
At present, most research is based on environmental legislation to analyze the effectiveness of environmental pollution prevention and control, and there is little literature to study the environmental protection effectiveness of environmental justice from an empirical perspective. Since 2007, environmental courts set up in various parts of China have provided reliable samples for empirical research on environmental judicial specialization. Through this quasi Natural experiment set up by environmental and resource courts in various parts of China, it is helpful to investigate whether the strengthening of the national environmental rule of law has promoted green mergers and acquisitions of enterprises to achieve green transformation so as to meet environmental standards, as well as in-depth analysis of its dynamic effects and mechanisms.
The possible contributions of this paper are mainly reflected in the following three aspects: First, using the Panel data of listed enterprises in China from 2003 to 2020, this paper verifies the role and mechanism of environmental justice strengthening for enterprises to achieve green growth transformation. At present, most research focuses on the impact of environmental legislation and law enforcement on corporate environmental behavior, and there is almost no research on environmental justice. This paper conducts empirical research based on the establishment of the most representative environmental resources court as a quasi Natural experiment, and finds that environmental judicial specialization can promote enterprises to actively take measures to achieve green transformation, which preliminarily verifies the effectiveness of environmental judicial strengthening for environmental governance.
Secondly, research on the influencing factors of green mergers and acquisitions of enterprises has been expanded. At present, research on green mergers and acquisitions of enterprises is still a relatively new field. Enterprises are driven by pressure and incentive effects to implement green mergers and acquisitions and carry out green transformation. There are many factors driving enterprises to engage in green mergers and acquisitions, including external factors such as media pressure, Confucian culture, and official systems. In order to cater to industrial policies, enterprises will actively engage in green mergers and acquisitions based on arbitrage motivation. Of course, the management's awareness of green development and the transformation of enterprise business strategies will also drive enterprises to engage in green mergers and acquisitions. However, there is currently no literature on the impact of institutional innovation in strengthening environmental justice on green mergers and acquisitions of enterprises. This article empirically tests that the establishment of environmental courts has a significant impact on green mergers and acquisitions of enterprises by enhancing judicial punishment, credibility, and raising public environmental awareness, filling the gap in literature in this field.
Finally, the positive role of the establishment of an environmental court was verified, supporting the effectiveness of the environmental court theory. Since the establishment of the Environmental Protection Court, there has been controversy in both academic and practical circles. Some scholars believe that the establishment of environmental protection courts has no theoretical basis, resulting in judicial confusion. There are few empirical studies on the economic effects of the establishment of environmental courts. Fan Ziying and Zhao Renjie empirically tested that judicial strengthening can promote local pollution control through the establishment of environmental courts. Zhang et al. verified that the establishment of environmental courts can encourage enterprises to invest in environmental protection. Gao Haoyu and Wen Huiyu examined from the perspective of "law and finance" that the establishment of environmental courts can increase the cost of debt financing for high polluting enterprises. This study found that the establishment of environmental courts can promote green mergers and acquisitions of enterprises and reduce environmental pollution, providing new evidence for the effectiveness of environmental courts.
2 Institutional Background and Theoretical Hypothesis
2.1 Institutional background
On the basis of drawing on the advanced experience of foreign environmental protection courts, China began the pilot construction of environmental judicial specialization in November 2007. In order to use judicial power to solve the serious pollution problem of "two lakes and one reservoir", China has set up the first special environmental judicial organization - the Environmental Protection Tribunal of the Intermediate people's court of Guiyang City, and set up the Environmental Protection Tribunal in the Primary people's court of Qingzhen City, County-level city under it. Given the dilemma of being unable to rely on after the establishment of China's environmental protection court at that time, the Supreme People's Court issued several opinions on providing judicial guarantees and services to accelerate the transformation of economic development mode and the Work Report of the Supreme People's Court in 2010 and 2011, respectively, and pointed out the necessity of establishing an environmental protection court, which also prompted corresponding adjustments to the Organic Law of the People's Court. On July 3, 2014, the Supreme People's Court announced the establishment of a specialized environmental resources trial court, marking the rise of the specialization of China's environmental trial institutions from local exploration to national layout, and the rapid growth of China's environmental courts since then. According to the statistics of the white paper "China's Environmental Resources Trial (2019 Edition)" issued by the Supreme People's Court, by the end of 2019, there were 1353 special environmental resources judicial institutions in China, including 513 environmental resources courts, 749 Judicial panel and 91 people's courts.
At present, China has set up a variety of special environmental judicial institutions (organizations), such as the environmental protection tribunal, the environmental protection Judicial panel and the environmental protection circuit court. Among them, the Environmental Protection Trial Chamber is a specialized court set up by people's courts at all levels to hear ecological and environmental issues. It has the strongest specialization and trial professionalism, and plays the largest role in the trial of environmental disputes and environmental protection in China. It is a truly specialized environmental trial organization. China's environmental protection court has also achieved exclusive and centralized jurisdiction, unifying the trial of environmental criminal, civil, and even administrative cases, and possessing a certain degree of professionalism in terms of judge allocation and trial procedures. From the aforementioned reforms, it can be seen that the environmental courts, guided by professional trials, have taken on the role of environmental rights relief, strengthened environmental judicial protection, and attempted to change the situation where citizens' environmental rights are "legally enforceable" but "not strictly enforced".
2.2 Theoretical analysis and research hypotheses
The establishment of environmental courts, as a judicial innovation in environmental regulation, constitutes an important driving force for enterprises to implement environmentally friendly strategies. The environmental court can promote green mergers and acquisitions by enhancing the "punitive power" of the judiciary. Due to the widespread conflicts of interest in environmental cases, the phenomenon of multiple causes and consequences is common, and there is a lack of unified standards for determining the cause of a certain environmental case, which constrains criminal and civil liability. After the establishment of environmental courts, many places implemented a "two in one" or "three in one" trial method, bringing environmental criminal, civil, or administrative cases under the jurisdiction of environmental courts, thereby making the handling of environmental cases more comprehensive and standardized, and improving the efficiency and accuracy of judicial trials. The environmental protection court not only ensures the authority of environmental laws and judiciary in the trial, but also guarantees citizens' environmental rights in the execution. For example, the environmental protection court establishes linkage mechanisms with local environmental protection bureaus (departments), procuratorates, public security bureaus, etc., and cooperates with each other to ensure the implementation of environmental judgments, thereby improving the judicial punishment effect on environmental violations and crimes. The above judicial strengthening measures form a strong constraint on corporate environmental pollution. Based on the resource-based theory, the difference in resources is an important factor in the formation of a company's competitiveness and will not be easily imitated. The establishment of an environmental court has made the green resources of clean enterprises a green "rent". Non green environmental protection enterprises lack sufficient environmental governance capabilities, and the research and development costs and risks of green innovation are high. Green mergers and acquisitions have become the most convenient channel for them to obtain scarce resources for green transformation. Therefore, after the establishment of the environmental protection court, non green environmental protection enterprises should take timely measures to prevent financial difficulties due to environmental penalties. Green target enterprises, due to their strong expertise in the field of environmental protection, can help their main enterprises increase environmental investment, reduce environmental illegal risks, and improve green competitiveness. In addition, according to the theory of market power, enterprises can gain market control over important resources through mergers and acquisitions, and obtain long-term profits through monopolies and other forms. Environmental protection enterprises will also achieve industrial agglomeration effect and scope economy through green mergers and acquisitions, thereby expanding their comparative advantage and obtaining sustained profits, achieving a "win-win" situation between environmental protection and economic development.
In addition, the environmental court has enhanced the "credibility" of the judiciary, which constitutes a institutional factor for green mergers and acquisitions of enterprises. American jurists such as Nornett proposed the concept of "responsive law" when analyzing the reasons for the emergence of law in social history, which means that law should be born for the needs of citizens and should not be rigid or dogmatic. The concept of responsive law embodies the idea of "active justice" and is considered by many scholars to be the theoretical basis for the establishment of environmental courts in China. At the practical level, the Environmental Protection Court has heard a series of public interest litigation cases filed by the China Environmental Protection Federation and the Guiyang Public Environmental Education Center, greatly enhancing the credibility of environmental justice. Victims can rely on justice and prioritize legal means to protect their rights in the face of environmental infringement. Enterprises need to implement source control or end of end governance to prevent environmental disputes. According to the synergy theory, mergers and acquisitions of green target enterprises can break the limitations of existing technological conditions and accelerate the realization of the innovation compensation effect of the "Porter hypothesis". They can also quickly achieve green transformation by borrowing advanced technologies or management methods from other enterprises to avoid falling into civil disputes or being subject to significant penalties.
In summary, the improvement of environmental law enforcement and credibility after the establishment of the Environmental Protection Court can be seen as a "hard constraint" of the Environmental Protection Court on enterprises, as it promotes green mergers and acquisitions through judicial deterrence and coercion. Based on this, this article proposes hypothesis 1.
H1: The Environmental Protection Court has increased the punitive power and credibility of the judiciary to impose "hard constraints" on enterprises, promoting green mergers and acquisitions.
In addition to imposing "hard constraints" on polluting enterprises through judicial enforcement, environmental courts can improve citizens' participation, right to know, and supervision through innovative measures, thereby enhancing public awareness of environmental protection, increasing the recognition of environmental values by the whole society, and forming a "soft constraint" on polluting enterprises through a "reputation mechanism", allowing enterprises to naturally incorporate "environment" as an important factor in decision-making analysis. The white paper of China Environmental Resources Trial (2019) pointed out that, with the development of network technology and media in recent years, the environmental protection court publicized typical environmental cases through various channels such as the trial process information disclosure network, WeChat official account, and microblog, and carried out legal education for the public, ensuring the public's right to know and supervise environmental cases. Some studies have considered that media pressure has an important relationship with environmental decision-making of enterprises, and further verified that media pressure significantly promotes green mergers and acquisitions of heavily polluting enterprises through the "Altruism hypothesis" and "Instrumentalism hypothesis". From this, it can be seen that under the "market pressure hypothesis" caused by media governance, whether it is to cater to institutional choices, meet the political demands of relevant stakeholders, or to transmit green transformation signals to society through green mergers and acquisitions, the establishment of environmental courts can promote enterprises to engage in green mergers and acquisitions through the "reputation mechanism". From this, it can be seen that enterprises, in order to meet the environmental demands of investors and the public, also actively engage in green mergers and acquisitions to seek their favor and achieve environmental "soft constraints". Based on this, this article proposes hypothesis 2.
H2: The environmental court adds "soft constraints" to enterprises by raising public awareness of environmental protection, promoting green mergers and acquisitions.
There have been studies on corporate growth strategies that attribute the growth mode of enterprises to both internal and external growth. The former mainly refers to enterprises utilizing their own accumulation for research and development innovation, optimizing internal resources, and improving organizational efficiency; The latter mainly refers to learning advanced technology and management experience from other enterprises through mergers or acquisitions, and integrating resources between enterprises based on comparative advantages. Corporate pollution control, as an important manifestation of social responsibility in the growth of modern enterprises, has also been discussed by scholars from both an internal and external perspective. Green technology innovation, as the basic path of enterprise connotation pollution control, helps to strengthen front-end control, reduce the generation of pollutants, and achieve green upgrading of enterprises; Green mergers and acquisitions, as an extension of pollution control paths for enterprises, help them quickly obtain external pollution control resources and achieve green transformation. Regarding the applicability of the two pollution control methods mentioned above, Tao Feng et al. found that implicit green innovation requires enterprises to have a certain technological foundation, while extensional green mergers and acquisitions require enterprises to have greater financial strength. For some smaller enterprises, when facing environmental regulations, they have to take measures such as shutdown, production reduction, or transfer. Therefore, it can be considered that green innovation, green mergers and acquisitions, and production suspension and reduction are three representative models for enterprise pollution control. Different governance models have their own advantages and disadvantages, and when faced with differentiated environmental regulation policies, enterprises will adopt heterogeneous emission reduction strategies. The establishment of an environmental court is a guarantee of citizens' environmental rights and also a constraint on corporate pollution behavior. As an institutional innovation in environmental regulation, the establishment of environmental courts has long-term and mandatory characteristics, forcing enterprises to respond quickly. Therefore, enterprises will adopt more long-term and effective transformation methods to achieve green growth. Unlike green technology innovation with long cycles, low returns, and high uncertainty, green mergers and acquisitions can enable enterprises to acquire green assets, green technologies, and green business management concepts in a relatively short period of time, efficiently meeting environmental protection standards, and avoiding environmental risks for enterprises. On the basis of completing its own pollution control, green M&A can achieve business transformation by virtue of the target enterprise's green market resources and Green marketing channels, eliminate backward production capacity, optimize resource allocation, and produce high-end green products. This transformation can not only improve its own environmental performance, but also greatly benefit the economic performance and long-term development of enterprises, and achieve "win-win" between economy and environment. However, measures such as shutting down and reducing production are a helpless measure taken by small enterprises when facing the strengthening of environmental justice, which affects their normal operation and is not conducive to green transformation. In summary, this article proposes hypothesis 3.
H3: Compared to other governance measures, green mergers and acquisitions are a transformation method that is conducive to the long-term development of enterprises under the background of judicial strengthening.
3、 Data Source and Model Design
3.1.2 Sample selection for mergers and acquisitions. In view of the fact that the Environmental Resources Tribunal of the Intermediate people's court of China was first established in 2007, and in order to make the parallel trend test have enough Sample space, the M&A events of Chinese listed enterprises from 2003 to 2020 were selected as samples. The merger and acquisition data is sourced from the CSMAR merger and reorganization database, and the merger and acquisition data was preprocessed using the approach of Pan Ailing.
3.1.2 Judgment on green mergers and acquisitions. The green M&A event is recorded as Greenma, which is judged by the Content analysis method. If the purpose of the M&A or the business scope of the target enterprise contains keywords such as "greening", "environmental protection", "energy conservation", "environmental governance" and "sewage treatment", it is deemed as a green M&A, and Greenma=1, otherwise Greenma=0.
3.2 Identification of intervention variables
According to the above analysis, China's environmental protection courts have a variety of organizational forms, but compared with the environmental resources court, the environmental resources Judicial panel and the circuit court have the characteristics of temporary establishment, uncertain judges, etc. In contrast, the environmental protection court is a specialized agency set up inside the people's courts at all levels, with more fixed personnel and a wider range of cases, so it has a stronger role. In addition, the environmental pollution Data deficient at the county level is lacking, and the establishment time of the environmental protection court is also difficult to verify. In order to ensure the reliability of the study, whether environmental resources courts are set up in each province (autonomous region, municipality directly under the Central Government) or each prefecture level city is used as an intervention variable to distinguish between the experimental group and the control group. For the identification of intervention variables, this paper determines the year of policy impact by manually collecting the time of setting up environmental resource courts in provinces (autonomous regions, municipalities directly under the Central Government) and cities at various levels.
3.3 Selection of control variables
Referring to existing literature practices, control variables are mainly selected from the enterprise and regional levels. The control variable data is sourced from the CSMAR database, and the meanings of each variable are detailed in Table 1.
3.3 Model Settings
Due to the uneven timing of the establishment of the environmental court, a multi-phase DID model is used:
Yit= β 0+ β one × DIDit++∑ j β J × Firmcontrollsit++ γ T+ μ I+ ε It (1)
Among them, Yit is the dependent variable, and here is the dummy variable of green mergers and acquisitions. If the merger event is a green merger, take 1, otherwise take 0. DIDit is the double difference item of whether the High people's court corresponding to the province (municipality directly under the Central Government, autonomous prefecture) where the enterprise is located has established an environmental protection tribunal or whether the Intermediate people's court corresponding to the Prefecture-level city where the enterprise is located has established an environmental protection tribunal. If and only if the experimental group has intervened, take 1; if not, take 0, β 1 is the coefficient of DIDit, and FirmControls is the control variable mentioned earlier. γ T is a fixed time effect, μ I is an individual fixed effect, ε It is a random perturbation term.
4.1 Descriptive Statistics
Table 2 shows the descriptive statistical results. In order to clearly show the statistical relationship between environmental courts and green mergers and acquisitions, this paper is divided into two groups: the Intermediate people's court in the Prefecture-level city where the enterprise is located has set up an environmental court (MDID=1) and the Intermediate people's court has not set up an environmental court (MDID=0). In the sample group with established environmental courts, green mergers and acquisitions accounted for 39%, while in the sample group without established environmental courts, green mergers and acquisitions only accounted for 22%. It can be preliminarily judged that green mergers and acquisitions have been fully reflected in the market, and enterprises will carry out green mergers and acquisitions in response to the pressure of environmental justice.
4.2 Benchmark regression results: The impact of environmental courts on corporate green mergers and acquisitions
From the benchmark regression results in Table 3, it can be seen that the establishment of the Environmental Resources Tribunal of the Intermediate People's Court can effectively promote local enterprises to engage in green mergers and acquisitions, while the establishment of the Environmental Resources Tribunal of the High People's Court has no significant impact on local enterprises' green mergers and acquisitions. The reason for this result is, on the one hand, due to the legal trial process of our country, most cases are accepted by the intermediate or lower people's courts first, and only when the parties to the case disagree with the judgment results can they be further tried by the High people's court. According to the trial principle of "the second instance final trial system" of civil cases in our country, most environmental cases can be closed in the Intermediate people's court. Therefore, the cases tried by the Intermediate people's court are reported by the media frequently, the public participates in the case audit and the opportunity of trial supervision is relatively more. Compared with the High people's court, it has stronger efforts to improve the public's environmental awareness, and the restraint mechanism of enterprises' "green reputation" can effectively play a role, so it can significantly promote green mergers and acquisitions of enterprises. On the other hand, the Environmental Resources Trial Chamber of the Intermediate People's Court is directly responsible for local environmental pollution cases, with relatively concentrated power and close geographical distance to most enterprises. Therefore, the cost of collecting and executing information on environmental violations is relatively low, and the punishment for pollution cases has a strong "punitive power" on enterprises. Enterprises will increase green mergers and acquisitions to meet environmental legitimacy requirements as soon as possible.
Note: The values in parentheses are T values, and * * *, * *, and * respectively represent significance levels of 1%, 5%, and 10% (double tailed). Same below.
4.3 Robustness testing
4.3.1 Parallel trends and dynamic tests established by environmental courts. The quasi Natural experiment requires that there should be no significant difference between the control group and the experimental group before the intervention of policy variables. Based on this, this paper conducts a parallel trend test, that is, before the establishment of the Environmental Resources Tribunal, there should be no significant difference in whether green mergers and acquisitions occur among enterprises in various cities.
4.3.2 Panel Logit and Probit inspections. Due to the fact that the dependent variable of green mergers and acquisitions is a dummy variable, linear regression models may not be able to fit the probability of green mergers and acquisitions occurring well. Therefore, panel Logit and Probit models are used to conduct robustness tests on the establishment of the Environmental Resources Tribunal of the Intermediate People's Court.
4.3.3 Remove the impact of municipalities directly under the central government. In the process of naming the people's court, the municipality directly under the Central Government did not set up the Intermediate people's court as a unit of Prefecture-level city, but as the first Intermediate people's court, the second Intermediate people's court, the third Intermediate people's court and other ways to be responsible for the jurisdiction of judicial adjudication cases in different regions of the municipality directly under the Central Government. In addition, the economic and political conditions of the municipality directly under the Central Government are also different from those of other regions. In order to overcome the differences in the organizational setup of the Intermediate people's court between the municipalities directly under the Central Government and other provinces, the municipalities directly under the Central Government were eliminated and the remaining samples were used for robustness testing.
4.4.4 PSM-DID. The judicial system adopts the "vertical management" mode. The operation of the environmental protection court of the Intermediate people's court is mainly guided by the superior court, not directly interfered by the administrative force of the local government, and independently exercises its functions and powers according to law. Therefore, it is reasonable to think that the establishment of the Intermediate Environmental Resources Tribunal is an exogenous policy shock. Nevertheless, we still mitigate the impact of randomness issues arising from the establishment of environmental courts through the method of Propensity Score Matching (PSM).
4.4.5 Placebo test. Further confirm the robustness of the benchmark regression results by pushing forward the policy and conducting a multi time point DID placebo test. First of all, push forward the establishment time of the environmental resources courts of cities at all levels by two or three years, and conduct a time placebo test. Secondly, place placebo test was conducted by randomly disrupting the corresponding cities of the experimental group and the control group for 500 times. By conducting a placebo test, the accidental impact of the Environmental Resources Tribunal on green mergers and acquisitions was ruled out.
The results of the above robustness tests all support the conclusion of the benchmark regression, so it is assumed that the H1 and H2 parts are validated.
5 Mechanism Analysis and Heterogeneity Testing
5.1 Mechanism analysis
5.1.1 Judicial punishment and credibility. From the previous analysis, it can be seen that the most direct effect brought by the establishment of environmental courts is to improve the punitive power and credibility of environmental justice. In order to establish the inspection mechanism, through manually sorting out the legal cases in the magic weapon database of Peking University, and drawing on the practices of Fan Ziying and Zhao Renjie, the environmental pollution cases heard by the county courts are uniformly classified into the Prefecture-level city where they are located, and together with the cases heard by the Intermediate people's court, they constitute the information of environmental pollution cases heard by the municipal courts at the local level. Criminal punishment is the most severe and has a stronger deterrent effect on enterprises, with greater punishment intensity. Therefore, this article uses the number of cases of the crime of damaging environmental and resource protection to measure the judicial punishment power, recorded as Crim. The improvement of judicial credibility represents an increasing number of citizens believing in the power of justice, and citizens are more likely to use the power of justice to safeguard their legitimate rights and interests. This article uses the number of cases of environmental pollution liability disputes to measure the credibility of environmental justice, recorded as Civil. From the results in Table 4, it can be seen that the establishment of environmental courts has significantly promoted the increase in the number of environmental criminal and civil cases closed. Therefore, the establishment of an environmental court has improved the efficiency of environmental case trials and has a strong "hard constraint" on the pollution behavior of enterprises. In order to further verify the impact of legal cases on green M&A, and at the same time eliminate the endogenous problem of intermediary variables, this paper uses the idea of Instrumental variables estimation and the practice of Wang Xin and Wang Ying to regress the green M&A of enterprises by using the fitting values of Crim and Civil in the previous test as intermediary variables. From the regression results, it can be seen that both criminal and civil cases have a significant promoting effect on green mergers and acquisitions of enterprises at a significance level of 1%. Therefore, assuming H1 is validated.
Table 4 Mechanism Test for Promoting Green Mergers and Acquisitions of Enterprises through the Establishment of Environmental Protection Courts: Improving Judicial Punishment and Public Trust
5.1.2 Public environmental awareness. Against the backdrop of increasingly strict environmental governance, the establishment of environmental courts may further enhance the environmental awareness of the local public and stimulate their enthusiasm for environmental protection. Faced with the increasing environmental awareness of the public, enterprises need to timely release signals of assuming environmental management responsibilities to avoid falling into a "reputation crisis". Unlike the mandatory nature of the judiciary itself, the improvement of citizens' environmental awareness imposes "soft constraints" on enterprises to assume environmental management responsibilities and transform production and operation strategies.
At present, most literature measures environmental awareness through survey questionnaires, but survey questionnaires have shortcomings such as relatively small sample size and poor data accuracy. This article uses Baidu Index to measure public environmental awareness. The Baidu Index is based on massive user behavior data, and can directly monitor media public opinion trends and measure public attention hotspots and trends through keyword search frequency. Compared with the way of questionnaire survey, Baidu Index can directly reflect the public's environmental awareness, with a larger amount of data and more objective, authentic and effective data quality. This paper uses Python to climb the Baidu index of four words of "emission reduction", "pollution", "environmental protection" and "ecology" in cities at all levels, which are recorded as Reduction, Pollution, Environment and Ecology respectively. From the results in Table 5, it can be seen that for the three Baidu indices of "emission reduction", "environmental protection", and "ecology", the MDID item is significant at different levels of significance. Overall, the establishment of the Environmental Resources Tribunal will increase public attention to environmental keywords and enhance public awareness of environmental protection.
Table 5 Mechanism Test for Promoting Green Mergers and Acquisitions of Enterprises through the Establishment of Environmental Protection Courts: Enhancing Public Environmental Awareness
To test the impact of public environmental awareness on green mergers and acquisitions of enterprises, this article uses the fitting values of the three significant Baidu indices of Reduction, Environment, and Ecology in the first step of the test as explanatory variables to regress Greenma. From Table 5, it can be seen that the three Baidu indices have a significant promoting effect on green mergers and acquisitions of enterprises at a significance level of 1%. Based on theoretical analysis, it can be seen that the establishment of environmental courts has raised public awareness of environmental protection. Under the constraints of the "reputation mechanism", enterprises will transmit green environmental signals to the outside world through green mergers and acquisitions to meet the environmental demands of relevant stakeholders. Therefore, assuming H2 is validated.
5.2 Heterogeneity analysis
Merger and acquisition activities involve the transfer of corporate control and the reorganization of resources. Green mergers and acquisitions may have certain differences between industries due to their specific purposes. Therefore, it is worth further exploring the heterogeneous impact of green mergers and acquisitions on different property rights and industries by environmental courts. Firstly, this article distinguishes between state-owned enterprises and non-state-owned enterprises for group testing. The group testing results show that the establishment of the Environmental Resources Trial Chamber of the Chinese People's Court has a significant promoting effect on the implementation of green mergers and acquisitions by non-state-owned enterprises. This may be because state-owned enterprises, due to their resource and information advantages, were able to achieve green development transformation in response to changes in the situation before the establishment of the environmental protection court; It is also possible that state-owned enterprises have stricter legal risk control systems, so they are not sensitive to local judicial reinforcement. Secondly, this article explores the differences between enterprises in the heavily polluting industry and those in the clean industry. Through inspection, it was found that the environmental court has a stronger promoting effect on the implementation of green mergers and acquisitions by heavily polluting enterprises. This may be because heavily polluting enterprises have more severe pollution and are more likely to be constrained by the environmental court. They are more likely to adopt active and effective methods to meet legal standards as soon as possible, thus having a stronger motivation to engage in green mergers and acquisitions.
6 Further analysis
Through theoretical analysis and empirical testing, it is found that the establishment of environmental courts promotes green mergers and acquisitions of enterprises. Can green mergers and acquisitions of enterprises improve their environmental governance capabilities? In the context of judicial strengthening, does green mergers and acquisitions have unique advantages compared to other environmental governance methods of enterprises, and become an effective way for enterprises to achieve green transformation? Can green mergers and acquisitions, as one of the possible ways for enterprises to transform, effectively enhance the overall environmental level of the region through their corporate level environmental governance effectiveness? To explore the above issues, this article first analyzes the impact of green mergers and acquisitions on corporate environmental investment and environmental performance, and makes a preliminary judgment on their governance effectiveness. Secondly, in order to further explore the differences between green mergers and acquisitions and other environmental governance methods, this article introduces two governance models, green innovation and production reduction, for comparative analysis with green mergers and acquisitions. Finally, this article examines the impact of green mergers and acquisitions on the regional environmental level by starting with the emissions and standard amounts of industrial waste such as "three wastes" in the region.
In order to test whether enterprises can effectively integrate and transform the experience of environmental management and Eco-investing into substantive environmental investment after completing green mergers and acquisitions, this paper regresses green mergers and acquisitions with the amount of environmental investment of enterprises as the explained variable. For the characterization of the green integration indicator of environmental protection investment amount, following the approach of Zhang Qi et al., in the detailed accounts of construction in progress in the annual report of listed companies, the amount of projects related to environmental protection was manually selected and recorded as EnvInvestment_ Raw represents the original value of the enterprise's environmental protection investment. To enhance the robustness of the regression results, environmental protection investments were standardized using the total assets and main business income of the enterprise as denominators, with the former recorded as EnvInvestment_ As, the latter is recorded as EnvInvest_ Re. From Table 6, it can be seen that in the results with the original value of environmental protection investment as the dependent variable, the regression coefficient of green mergers and acquisitions significantly decreased after standardizing the total assets and main business income at a significance level of 5%. However, one regression result still passed the 5% significance test, and two regression results passed the 10% significance test. Therefore, it can be considered that after completing green mergers and acquisitions, the level of environmental protection investment has significantly improved, presenting the "green integration" effect of mergers and acquisitions.
Table 6: The impact of green mergers and acquisitions by enterprises on their own environmental investment
Green integration refers to the investment of resources by enterprises into more environmental governance projects after the completion of mergers and acquisitions, which is a reflection of the governance process. The governance results, namely environmental performance, are more worthy of attention. In this regard, this article focuses on examining the effectiveness of green mergers and acquisitions by enterprises from the perspective of environmental performance, while also paying attention to their impact on economic performance. For environmental performance, following the approach of Li Zengfu and Feng Liuhua, the environmental score in the Huazheng ESG index score is used as the proxy variable for enterprise environmental performance, and recorded as Esocre. For economic performance, the change rate of total profit margin is selected as the proxy variable and recorded as Δ Profit. From Table 7, it can be seen that regardless of the year in which green mergers and acquisitions occur or the following years, their impact on corporate green performance is still significant within 5% or 10%. This indicates that green mergers and acquisitions can not only promote the improvement of corporate environmental governance in the short term, but also be an effective way for long-term green transformation. Meanwhile, only in the first year after green mergers and acquisitions, green mergers and acquisitions have significantly improved the profit margin of enterprises. Although the estimated coefficients for other years are not significant, they are all positive, indicating that green mergers and acquisitions have not led to a decrease in economic performance of enterprises in both the short and long term. From this result, it can also be seen that green mergers and acquisitions are carefully considered strategic actions by enterprises. They not only internalize external environmental governance technologies, but also achieve a "win-win" situation between the environment and the economy through resource integration effects, which is conducive to the long-term development of enterprises.
Table 7: The impact of green mergers and acquisitions by enterprises on their own environment and economic performance
Although green mergers and acquisitions can help enterprises achieve green transformation, further verification is needed to determine whether there are differences in effectiveness compared to other environmental governance models in the context of strengthened environmental justice. To this end, the first step is to compare green innovation with green mergers and acquisitions to test the differences in their effects on enterprise transformation. The logarithm of enterprise green patent authorization (Greivt) is used as the proxy variable for green innovation. Due to the fact that this article focuses on the comparison of different green transformation methods under the background of environmental judicial strengthening, the relationship between judicial strengthening and green innovation was not involved in the previous empirical testing. Therefore, this article introduces MDID and its interaction with green patents during the testing process × Greivt, with a focus on analyzing the characteristics of the coefficient of the intersection term, and the regression results are shown in Table 8. By the MDID of the interchange item × The coefficient of Greivt indicates that in the context of judicial strengthening, the promoting effect of green innovation on corporate environmental performance was only effective in that year. For the economic performance of enterprises, the coefficients of the intersection terms are not significant but are generally positive in the early stage. Therefore, it can be considered that green innovation will at least not reduce the economic performance of enterprises. In summary, in the context of judicial strengthening, green innovation can also achieve a "win-win" situation for the economy and environment, but the governance effect of green mergers and acquisitions is more long-term.
In addition to proactive environmental governance, "shock like" transformation methods such as shutdowns, production reductions, or transfers have also become strategic measures taken by some enterprises in the face of environmental regulations. In order to compare the differences between this "shock" type of environmental protection measures and green mergers and acquisitions, this article compares production reduction with green mergers and acquisitions. Drawing on the approach of Shen Hongtao et al., the total sales revenue plus ending inventory balance minus beginning inventory balance is selected as the proxy variable for the enterprise's output value. The logarithm is further taken and subtracted to measure the change in the enterprise's output value, which is recorded as ∆ production Production less than 0 indicates a reduction in production, while ∆ production greater than 0 indicates an increase in production. From Table 9, it can be seen that the impact of production reduction on corporate environmental performance was only significant in the current year. Therefore, it can be considered that production reduction can only serve as an emergency measure for enterprises to respond to judicial environmental regulations, and is not an effective way to achieve green transformation of enterprises. At the same time, this article further examines the economic performance of production reduction. Although the overall impact of ∆ production and the interaction term on ∆ Profit is not very significant and the symbols are not uniform, it can still be seen that the positive regression coefficient accounts for the majority, indicating that the overall impact of production reduction on the economic performance of enterprises is negative. That is to say, the improvement of environmental performance by production reduction is a "drinking poison to quench thirst" solution, which improves environmental performance in the short term, But at the same time, it requires a certain economic cost, and its transformation effect is relatively poor compared to green mergers and acquisitions. At this point, assuming H3 is verified.
7 Conclusion and Countermeasure Suggestions
This paper takes the establishment of environmental courts as a quasi Natural experiment, and uses the double difference method to study the impact of the establishment of environmental courts on green mergers and acquisitions of listed companies from 2003 to 2020. The research finds that the establishment of the environmental protection court of the Intermediate people's court has promoted the green M&A activities of enterprises, which is mainly because the establishment of the environmental protection court has strengthened the judicial punishment and credibility, improved the public awareness of environmental protection, and forced enterprises to carry out green M&A to achieve green transformation. Heterogeneity testing shows that the driving effect of environmental courts on green mergers and acquisitions is more significant in heavily polluting enterprises and non-state-owned enterprises. Further research has found that companies have demonstrated the "green integration" effect of mergers and acquisitions by enhancing their environmental investment efforts, and the significant improvement in environmental performance levels has shown the "green transformation" effect of mergers and acquisitions. In addition, compared to green innovation and shutdown and production reduction governance models, green mergers and acquisitions have a long-term impact on corporate environmental governance, enabling them to achieve a "win-win" situation between environmental protection and operating profits. However, the macro transformation effect of green governance needs to be improved.
Based on the above conclusions, this article proposes corresponding countermeasures and suggestions from three aspects: environmental judicial construction, selection of green transformation methods for enterprises, and optimization of green mergers and acquisitions. Firstly, strengthen the construction of environmental justice through more scientific methods. Consider increasing the number of environmental courts appropriately, enhancing the professionalism of environmental judicial personnel through judicial training and other methods, developing unified environmental judicial trial standards, and further enhancing judicial trial efficiency and credibility; By improving the environmental judicial litigation system, expanding the channels for handling judicial litigation, and enhancing the awareness of environmental judicial rights protection, we will further promote the work of environmental pollution control in China, and achieve the green development and transformation of enterprises; Pay attention to the linkage mechanism between environmental justice and environmental law enforcement, pay attention to the importance of environmental case execution procedures, and ensure the implementation of environmental case trials and executions.
Secondly, guide enterprises to choose appropriate green transformation methods. Against the backdrop of strengthening environmental justice, green mergers and acquisitions have achieved Pareto improvements in corporate environmental protection and economic performance, becoming an effective way for enterprises to achieve green transformation. Although other types of governance methods can have a certain impact on environmental performance in the short term, the sustainability of environmental governance effectiveness is relatively weak. Therefore, the government should strengthen the promotion and education of the concept of sustainable development, guide enterprises to establish a more long-term strategic vision, and reduce temporary production cuts and production stoppages and other coping measures. However, it should be noted that due to the transfer of corporate control and even the splitting and merger of enterprises involved in green mergers and acquisitions, there are high requirements for the financial strength, management scale, and technical level of enterprises, and some enterprises find it difficult to have sufficient capacity to cover the investment costs of green mergers and acquisitions activities. Therefore, for these enterprises with development potential and transformation space, the government should provide more technical support on the one hand, and also guide them to choose low-cost and more feasible methods for environmental governance such as purchasing environmental protection equipment and front-end control at different stages of development.
Finally, improve the macro transformation mechanism for green mergers and acquisitions of enterprises. Although green mergers and acquisitions have significantly improved the environmental performance of enterprises themselves, the governance effect of regional pollutants still needs to be improved. Perhaps it is because listed companies have abundant resources and have played a leading role in green M&A activities. Although listed companies are relatively large in scale, they make up a relatively small proportion, making it difficult to fully leverage their governance effects on the regional environment. By means of market-oriented reform and institutional design, the information sharing mechanism for green mergers and acquisitions is unblocked, and the technical barriers and threshold constraints for green mergers and acquisitions are lowered, achieving the same group effect or technology spillover effect of green mergers and acquisitions, transforming listed companies from "leading geese" in green mergers and acquisitions into "leaders", and driving other enterprises to improve the overall environmental protection level of the region.