Do specialized courts matter? Environmental judiciary and corporate emissions in China

Abstract

Strengthening the legal system is an effective guarantee for realizing ecological civilization. The establishment of environmental courts aims to enhance environmental judicial efficiency, thereby promoting low-carbon transformation. With aggregate firm-level data from the Annual Survey of Industrial Firms data set and Environmental Statistics Reporting database from 2005 to 2013, this paper employs a staggered difference-in-differences approach to investigate the pollution reduction impact of environmental court. We find that environmental courts play a significant role in facilitating the reduction of corporate pollution emissions. This study reveals that the strengthening of environmental judiciary exerts its influence through three primary channels: intensifying environmental administrative law enforcement, promoting corporate innovation, and increasing governmental environmental attention. Furthermore, the emission reduction effect of environmental courts is more significant in cities with higher environmental information transparency, non-key environmental protection cities, and labor-intensive enterprises. In addition, the effect of environmental judiciary may spill over to nearby non-environmental courts cities due to spatial policy diffusion. This paper supports the strategy of orderly advancing the construction of a beautiful China through strengthening environmental legislation and judicial measures.