Governmental subsidies, corporate environmental investments and firm performance: Evidence based on oil & petroleum industry

This paper examines the impact of different types of government subsidies on the financial performance of oil & petroleum corporations. We find that environment-friendly government subsidies enhance the investments in environmental protection of oil & petroleum corporations, comparing with non-environment-friendly subsidies. Furthermore, preventive investments in environmental protection significantly mediate the effect of corporate subsidies on financial performance, whereas government investments in environmental protection have a masking effect. Overall, we provide policy implications for government support to balance the development of firms and environmental protection.