Environmental justice construction and firm cost stickiness: evidence from environmental courts

This study examines the impact of environmental justice on firms’ cost behaviour by leveraging the establishment of environmental courts in China as a quasi-natural experiment. Results indicate that environmental courts significantly increase firms’ cost stickiness. Further analysis shows that this effect is stronger in firms with higher adjustment and agency costs but absent in those with higher internal control quality. This study provides new insights into the determinants of cost stickiness by investigating the role of environmental justice construction.