The impact of environment regulation on Chinese-Listed Enterprise performance : Moderating effect of environmental protection subsidies

China has accelerated its transformation toward "green development" by implementing strict environmental regulatory policies. Enterprises are increasingly pressured to comply with these regulations. They often facing the challenge of balancing short-term interests with long-term sustainability goals. Additionally, state-owned enterprises and non-state-owned enterprises respond differently to these regulations due to differences in ownership structure. This study investigates the impact of environmental regulations on the performance of Chinese listed manufacturing enterprises and further examine the moderating role of environmental protection subsidies. Using panel data from 143 Chinese listed manufacturing enterprises between 2010 and 2023, the study adopts Tobin’s Q as the dependent variable to measure enterprise performance, environmental regulation as the independent variable, and environmental protection subsidies as the moderating variable. The empirical results show that environmental regulation has a significant positive effect on enterprise performance. Stricter regulations are associated with higher market valuation. Furthermore, environmental protection subsidies play a significant positive moderating role in this relationship, effectively alleviating the financial burden of regulatory compliance. The moderating effect is more pronounced in state-owned enterprises, likely due to their closer alignment with government expectations and greater access to policy resources. This study offers both theoretical and practical implications. Theoretically, it contributes to the understanding of how institutional pressures and incentive mechanisms interact to affect firm performance, particularly in emerging economies. Practically, the findings provide valuable insights for policymakers in designing targeted and effective environmental policies, and for business managers and investors seeking to balance environmental responsibility with financial performance