The effect of voluntary environmental regulation on corporate financialization in China

Government regulation is an important factor influencing corporate investment and financing decisions. However, little research has examined the role of voluntary regulation. This paper focuses on how voluntary environmental regulation shapes this process by investigating the impact of Green Factory Certification on corporate financialization. Using a multi-period difference-in-differences model and data on China's A-share listed manufacturing firms from 2012 to 2023, we find that Green Factory Certification significantly curbs corporate financialization. This inhibitory effect is more pronounced in companies with stronger financing constraints, better corporate governance quality, and cities with stricter financial and environmental regulations. Furthermore, the mechanism analysis reveals that voluntary environmental regulation alleviates the "reservoir" motive via "green signal transmission" (improving financing conditions and securing government subsidies) and weakens the "investment substitution" motive through "voluntary commitment and reputation maintenance" (proactively boosting fixed investments and green innovation). This study enriches research on voluntary environmental regulation's economic effects and provides empirical support for optimizing green industrial policies.