Environmental　regulation　and　economic　development　are　consistent　in　the　long　run,　but　there　are　certain　contradictions　in　the　short　term.　Examining　the　characteristics　of　available　environmental　regulation　tools　and　using　them　in　a　way　that　will　align　the　interests　of　local　governments　and　enterprises　can　improve　environmental　regulation　and　enhance　green　transformation　and　development.　This　study　considers　two　general　types　of　environmental　regulation　tools:　negative　punishment　types　and　positive　incentive　types.　Applying　an　intermediary　effect　model　and　the　two-stage　least　squares　method,　a　sample　of　Chinese　A-share　listed　companies　from　2007　to　2019　is　used　to　test　the　impact　of　these　different　types　of　environmental　regulation　tools　on　the　financial　investment　levels　of　entity　enterprises.　The　mechanism　through　which　these　macro-environmental　regulation　tools　function　and　the　micro-enterprise　heterogeneity　factors　that　influence　their　impact　are　systematically　studied.　The　results　show　that　negative　punishment　type　environmental　regulation　tools　have　a　positive　impact　on　the　financial　investment　levels　of　entity　enterprises,　while　positive　incentive　type　environmental　regulation　tools　inhibit　financial　investment　levels.　This　impact　is　formed　through　managerial　incentive　mechanisms　referred　to　as　＂whipping　the　fast　ox　＂　and　＂heavy　rewards　and　light　punishments.　＂　Factors　such　as　financing　constraints,　relocation　costs,　pollution　levels,　and　enterprise　scale　have　heterogeneous　effects　on　these　paths.　Policy　suggestions　are　offered　based　on　the　findings.　This　study　makes　a　significant　contribution　to　the　literature　by　clarifying　the　channel　through　which　environmental　regulation　influences　micro-enterprise　decision-making.　It　provides　a　theoretical　basis　and　policy　reference　for　local　government　officials　as　they　address　the　conflict　between　economic　growth　and　environmental　protection　in　the　short　term.　Moreover,　the　results　offer　long-term　development　decision-making　ideas　for　shareholders　and　managers　in　the　process　of　green　transformation　and　upgrading　of　enterprises.