Peer effects of firm environmental protection expenditures

This study investigates the existence and influencing factors of peer effects in firms' environmental protection expenditures (EPE). Using data from Chinese A-share listed companies from 2010–2021, we find that firm EPE decisions are positively influenced by the average level of peer firms within the same industry. Furthermore, we document that the peer effects of firm EPE are more significant when firms are covered by the new Environmental Protection Law and analysts. We also find that the peer effects of EPE can increase firm value, indicating that peer effects can enhance the scientificity and legitimacy of decision-making. To the best of our knowledge, our study is the first to investigate the influencing factors of firm EPE decisions from the perspective of peer effects, which can provide empirical evidence for firms' green behavioral decisions and the formulation of environmental regulation policies.