Green Transformation of Enterprises from a Cost–Benefit Perspective: Unveiling the Mediating Influence of Environmental Costs

As the main drivers of the market economy, enterprises must fully grasp the importance and urgency of building an ecological civilization and hasten the transition to green practices. Due to the fundamental goal of enterprises being to maximize profits, the cost-effectiveness of enterprises is directly related to their initiative and implementation effectiveness in carrying out green transformation. This article uses panel data from heavily polluting companies listed on the Shanghai and Shenzhen stock exchanges in China from 2011 to 2020 to empirically test the cost-economic effects of corporate green transformation (CGT). Results reveal: (1) CGT has a positive effect on firm performance, and managerial incentives and capital intensity can strengthen the positive relationship between CGT and firm performance. In addition, in economically developed regions with high levels of environmental regulation, the green transformation of heavily polluting enterprises with lower management agency costs has a more significant positive impact on corporate performance. (2) Environmental costs mediate the link between CGT and firm performance, with the mediating effect of corporate environmental costs playing a role only in the non-three major economic circles.