The "promoting effect" of government environmental protection subsidies on enterprises’ environmental performance is mainly reflected in resource compensation and signal transmission. In order to gain long-term competitive advantage, enterprises are willing to make environmental investment and actively undertake environmental responsibility. According to the relevant national environmental policies, such as "several provisions on strengthening the management of environmental protection subsidy funds”, “the environmental protection tax law of the People’s Republic of China" and other relevant provisions, enterprises encouraged by environmental protection subsidy policies are more likely to obtain government resource support on the one hand, and release good signals to the outside world on the other hand, which is conducive to boost investor confidence, reduce the cost of financing, so as to encourage enterprises to participate in environmental governance.
As one of the important means of government macro-control, environmental protection subsidy can well reflect the industrial policy of a country or region in a certain period. In order to correct the impact of market failure on national economy, governments of various countries generally use fiscal subsidies and other policy tools to drive the transformation and upgrading of related industries, especially the transformation and upgrading of environmental protection industries. Some scholars believe that since China's energy conservation and environmental protection industry plays an important role in alleviating environmental externalities, as a capital-intensive environmental protection industry, it needs policy support or government subsidies in the emerging stage of innovation(Xu et al,.2021). Some studies believe that environmental subsidies promote environmental management innovation, but have no impact on environmental technology innovation༈Ren et al,.2021༉. Therefore, whether the government environmental protection subsidies can achieve effective results lies in whether the government's macro policy design intention is effectively implemented at the micro enterprise level. Although the ecological environment governance requires a large amount of long-term investment of resources, the ecological environment has the characteristics of a public product, private enterprises have no strong motivation to participate in environmental governance, and lack of resource incentives and constraints are the problems that beset the environmental governance of enterprises (Grossman and Helpman, 2018). According to the theory of public goods, the ecological environment is not privately owned, but belongs to public resource. The governance of the ecological environment will occupy other productive investments originally used by enterprises, which is undoubtedly extra cost for enterprises. In this case, enterprises will lose the original motivation for green governance of their pollution behaviors. A large number of enterprises in environmental governance "free ride" phenomenon will lead to environmental market failure. The environmental protection subsidy policy implemented by the government alleviates the lack of funds needed by enterprises for environmental governance, helps enterprises expand reproduction and form economies of scale, so as to reduce the cost of environmental governance and make up for the profit loss caused by the positive externalities of environmental governance activities. At the same time, the government environmental protection subsidies incentive constraints, heavier pollution enterprises to seek their own profit maximization, in daily production operations have strong willingness to adopt green technology and new energy technology, pollution to eliminate backward production capacity, which can improve the efficiency of resource allocation in enterprise, finally realizes the "reducing pollution emissions " and " Increasing economic efficiency " double benefit (Yu et al,. 2019).
On the one hand, the government environmental protection subsidy has the resource compensation effect; on the other hand, once an enterprise enjoys government environmental protection subsidies, it will be subject to more stringent environmental supervision by government departments, and the government will mainly supervise and evaluate the direction and efficiency of the use of special environmental protection funds (Stoever and Weche, 2018). Therefore, the government's environmental supervision of enterprises' environmental protection subsidy funds will undoubtedly restrict enterprises' non-green production and environmental illegal behaviors, so as to improve enterprises' environmental performance.
Existing studies have shown that executives' awareness of environmental protection is a specific manifestation of executives' cognition (Zhang et al., 2015), and executives' cognition of environment determines whether enterprises actively adopt green production behaviors (Yang et al., 2012). Government environmental protection subsidy policy support makes enterprise executives realize that government subsidy funds can reduce the risk of environmental protection investment and reduce the cost of environmental governance (Henriques and Sadorsky, 1996; Li and xiao, 2020). The stronger the support for environmental protection subsidies, the more likely it is for enterprise executives to pay attention to environmental policies and regulations, information on government support policies, and the latest trends of government punishments or rewards based on the environmental performance of peer enterprises (Suk et al., 2013). Therefore, senior executives are more aware of the importance of environmental issues to the development of enterprises (Gholami et al., 2013), and are more likely to implement positive environmental strategies to respond to the government's intention of environmental policy (Zhang et al., 2015), which can undoubtedly improve the environmental performance of enterprises.
Based on the theory of signal transmission, companies that receive environmental subsidies from the government, there is no doubt that it sends an important signal to the world, this kind of company is behind the government as a recessive guarantee, which will enhance the company's financing gravity (zhang, etc., 2017), be helpful for enterprises to raise funds through the capital market, boost the confidence of the stakeholders to the enterprise green development, reduce financing costs of enterprises and encourage enterprises to participate in environmental governance, which reduce negative expectations of stakeholders on non-green environmental protection behaviors of enterprises (Buysse and Verbeke, 2003). And it has a positive impact on effectively reducing the financing difficulties of enterprises, increasing investment in green technology innovation and improving the efficiency of environmental governance. For enterprises with heavy environmental pollution, their environmental governance is characterized by large investment in special equipment, long investment cycle span, high risk and slow effect (Rabelo and Melo, 2019), which is undoubtedly inseparable from the support of sufficient cash flow. And the enterprises that receive the government environmental protection subsidies obviously send a favorable signal to the external stakeholders: the implicit government guarantee behind the enterprises facilitates the enterprises to raise funds from the bond market and the stock market. More importantly, an enterprise's active participation in green environmental governance is no different from sending a signal of its legitimate operation to the outside world, promoting its good image of fulfilling its social responsibilities, providing psychological guarantee for investors to make decisions, raising investors' good expectations for the enterprise, helping to reduce financing costs and providing financial guarantee for enterprises to improve environmental performance (Martin and Moser, 2016). The government provides support to heavily polluting enterprises participating in environmental governance through measures such as environmental protection subsidies, which can help them expand reproduction, reduce the uncertainty and irreversibility of their environmental governance investment, and then promote enterprises to adopt green environmental protection equipment and new green technologies (Hamamoto, 2006). Thus it is conducive to the improvement of environmental performance. Therefore, government environmental protection subsidies have a positive incentive effect on environmental protection investment and environmental governance of enterprises. Based on the above analysis, the following assumptions are proposed:
H1: Government environmental protection subsidies have a positive impact on the improvement of environmental performance of heavily polluting enterprises.
As we all know, environmental protection subsidies have become an important economic means for the government to intervene in enterprises' practice of green environmental protection. In order to alleviate the pollution problem, the government invests a large amount of environmental protection subsidies every year. How these subsidies help enterprises reduce emissions and reduce pollution and clean production, as well as the effect of environmental protection subsidies, are important practical issues that need to be studied in depth. The above theoretical analysis shows that government environmental protection subsidies will affect the environmental performance of enterprises. Therefore, through which channels the government environmental subsidies affect the environmental performance of enterprises, and to clarify the mechanism of action between the two will help reveal the "black box" in which the government's macro policies affect the micro behaviors of enterprises. Based on the existing research results, this paper argues that green technology innovation of enterprises, environmental regulation of government and environmental awareness of executives are important ways for environmental subsidies to affect green production behavior and environmental performance of enterprises. The reasons are as follows.
(1) Environmental protection subsidies affect enterprises' environmental performance: green technology innovation mechanism
First of all, according to the theory of technological innovation, green technological innovation can improve the efficiency of resource utilization, significantly reduce the energy consumption per unit product, and eliminate backward polluting capacity, so as to promote enterprises to realize green production. However, technological innovation of enterprises is of high risk, great uncertainty, and needs a large amount of sustained capital investment as support. Difficulties in financing and lack of motivation have always troubled enterprises' green technology innovation (Hsu et al., 2014). However, the government's environmental protection subsidies have provided financial support for enterprises' green technology innovation. It reduces the financing constraints faced by enterprises due to green innovation, reduces the high risk and uncertainty of innovation activities (Stiglitz, 2015), and reduces the cost of green innovation, which is conducive to encouraging enterprises to carry out green innovation. Empirical evidence of Shapiro and Walker (2018) also shows that government green environmental protection subsidies are conducive to promoting enterprises' green technology innovation.
Secondly, based on the externality theory, innovation once appear, the owner usually is unable or difficult to exclude others for the use of green technology innovation, or can't fully control the spread of the green innovation technology, so as to make the innovation the private income is less than the social benefits of the enterprise, show the Spillover effects of green technology innovation (Spillover Effect). Government environmental protection subsidies can effectively overcome the cost-benefit asymmetry caused by the spillover effect of enterprises' green technology innovation, which is conducive to improving enterprises' enthusiasm for green technology innovation, and thus can alleviate the problem of insufficient investment in private enterprises' green technology innovation. More importantly, enterprises use green innovative technologies and green intelligent equipment in the production process. On the one hand, it is conducive to accelerating the green production process of enterprises, reducing the dependence on the original production methods that damage the environment, so as to reduce the cost of environmental supervision and improve the environmental performance of enterprises (Shapiro & Walker, 2018). On the other hand, through the green technology innovation chain, enterprises produce green differentiated products to create new market demand and enhance green competitiveness, which is conducive to maintaining existing markets and even expanding new markets (Barney, 1991). It can be concluded that the government environmental protection subsidies can stimulate enterprises to increase their investment in green technology innovation under the premise that the government environmental protection subsidies can relieve the resource constraints of enterprises' innovation.
And the government's environmental protection subsidies may help to encourage heavily polluting enterprises to invest in green technology innovation, mainly because: Whether an enterprise can carry out green technology innovation depends on whether it can meet the threshold conditions of innovation, especially with the support of continuous cash flow. The government's environmental protection subsidies can help an enterprise to cross the threshold conditions of green technology innovation and reduce the uncertainty and irreversibility of its green technology innovation. Thus, it is helpful for enterprises to make green technology innovation decisions (Hamamoto, 2006), and green technology innovation of enterprises helps them to eliminate polluting and backward production capacity, improve production efficiency and environmental performance (Porter & Linde, 1995; Hu et al., 2020). Based on the above analysis, the following assumptions are proposed:
H2:Environmental protection subsidies can encourage enterprises to innovate in green technology, thus helping to improve their environmental performance.
(2) Environmental subsidies affect the environmental performance of enterprises: government environmental supervision mechanism
As a special subsidy supported by the government, the use of environmental protection subsidy funds should comply with the "Provisions on Strengthening the Management of Environmental Protection Subsidy Funds", according to this regulation, environmental protection subsidies should be used for "comprehensive environmental treatment, key pollution source treatment", special funds, not diverted for other purposes. Enterprises that have obtained special environmental protection subsidy funds will become the target of the government's key supervision, and the government will mainly supervise the use direction and use efficiency of the special environmental protection funds. Therefore, the government's supervision of enterprise environmental protection subsidy funds will restrict enterprises' non-green production and environmental illegal behaviors, so as to improve the environmental performance of enterprises.
With the increasingly severe resource and environmental constraints, it is urgent to promote green production and improve environmental performance of enterprises. As the core content of environmental protection system, the effectiveness of environmental law enforcement supervision is directly related to the implementation effect of national environmental protection policies, and is an important factor that determines the production and emission behavior of individual enterprises and even the environmental quality of the whole region. Environmental protection law enforcement and supervision is the main driving force leading the change of green technology choice of enterprises (Wang et al., 2018). Zhang and Jiang (2013) showed that strengthening the environmental protection law enforcement will improve access of polluting, energy intensive industries and survival threshold, this will encourage enterprises to carry out the green technology innovation and application, thus is advantageous to the enterprise energy conservation and emission reduction and green production, and realize the innovation drive "win-win" and environmental performance. Recent studies also show that stringent administrative regulation is the primary driver for companies to reduce pollution emissions (Shapiro & Walker, 2018). The reason why the government should regulate the enterprises that obtain financial subsidies is more based on the stakeholders proposed by experts and scholars represented by Freeman. In modern economic society, as the stakeholder of enterprises, the importance of the government is irreplaceable, mainly because: on the one hand, the government provides financial support, tax reduction and other preferential policies for the development of enterprises; on the other hand, it is also responsible for the supervision of enterprises' micro behaviors, especially their performance of environmental responsibility. Environmental protection subsidies are financial support provided to enterprises by the government to encourage enterprises to carry out energy conservation and emission reduction and actively participate in environmental governance for the purpose of environmental governance. They are free transferring payments unilaterally provided by the government and undoubtedly have specific objectives and related environmental performance requirements. In order to optimize the allocation of resources, increase the benefit of environmental subsidies, ensure that using limited special allowance incentive can implement specific economic, environmental and social objectives, implement enterprise's main body responsibility, the government will undoubtedly strengthen the regulation of enterprise production and operation activities, it will restrict the production of the enterprise sewage behavior, which is helpful for the improvement of the corporate environmental performance.
Based on the above analysis, the following assumptions are proposed:
H3: After the implementation of environmental protection subsidies, the government's environmental supervision will be strengthened, which is conducive to the improvement of enterprises' environmental performance.
(3) Environmental subsidies affect corporate environmental performance: the mechanism of environmental awareness of senior executives
Although domestic and foreign scholars have conducted cross-industry dynamic studies on the impact of environmental protection subsidies, there is still insufficient research on the following basic practical issues: why do enterprises in the same industry receive the same amount of environmental protection subsidies under the same institutional environment adopt different environmental protection behaviors? In other words, why do environmental protection subsidies have heterogeneous effects on environmental protection behaviors of enterprises in the same industry?
According to Upper Echelons Theory, senior executives are the core predictive variables that affect the strategic choice and performance level of an enterprise (Hambrick & Mason, 1984). Executives make bounded rational decisions based on their background characteristics, personal psychological traits and cognitive paradigm (Hambrick, 1994). The research of Yang et al. (2012) shows that executives' cognition of environment determines whether enterprises actively adopt green production behaviors. The environmental awareness of senior executives is a specific manifestation of their cognition (Zhang et al., 2015).
The guiding effect of government environmental protection support is mainly reflected in the following aspects: On the one hand, it makes enterprise executives realize that government subsidy funds can reduce the risks of environmental protection investment and reduce the cost of environmental governance (Henriques and Sadorsky, 1996; Li and xiao, 2020); On the other hand, the greater the government's support for environmental protection for enterprises, the more it can encourage enterprise executives to pay attention to environmental policies and regulations, information on government support policies and the latest trends of government's punishment or reward based on the environmental performance of peer enterprises (Suk et al., 2013). As a result, senior executives have obtained more information about green environmental protection, so that they are more aware of the importance of environmental issues to the development of enterprises, and more positively and optimistically interpret the guiding function of the policy guidance of environmental protection subsidies on the green production behavior of enterprises (Gholami et al., 2013). Therefore, it is more likely to implement positive environmental strategies to respond to the government's environmental protection subsidy policies to achieve the purpose of environmental protection (Zhang et al., 2015), which is conducive to the improvement of enterprises' environmental performance.
H4: Government environmental protection subsidies can enhance the environmental awareness of senior executives, thus help to improve the environmental performance of enterprises.