Environmental regulation can not only increase the environmental protection input of industrial enterprises, but also bring them financial burden. It is necessary to formulate effective policies to balance the relationship between environmental protection and corporate development. By establishing two models from the perspectives of government innovation incentive at the source of production and industrialized environmental protection activities at the end of production, the mechanism of weakening the negative impact of environmental protection input on financial performance and the heterogeneity of state-owned enterprises are discussed, and the conclusions are empirically tested using the samples of listed enterprises in A-share manufacturing industry. The results show that government innovation incentive at the source of production and industrialized environmental protection activities at the end of production can weaken such a negative impact, but the effectiveness of two mechanisms is conditioned. State-owned enterprises, as policy tools, can reduce the effect of innovation incentive. The government may fund the environmental protection of state-owned enterprises too much, prompting them to increase terminal environmental protection input and reducing the efficiency of industrialized environmental protection. With the introduction of stricter environmental protection laws and regulations, local governments may give excessive incentives to corporate environmental protection, reducing the benefits of industrialized environmental protection.