This study assesses the impact of China’s Green Credit Guidelines (GCG) 2012 on the quality of firms’ green innovation and their financial asset allocations. While examining patent applications and grants, our findings reveal that, although the GCG 2012 led to a significant increase in green patent applications, its influence on granted patents, especially in the invention category, was minimal. This highlights a discrepancy between innovation intent and quality, suggesting that highpolluting enterprises (HPEs) prioritize rapid policy compliance rather than substantial environmental improvements. However, HPEs seem to prioritize liquidity over long-term financialization, potentially indicating enhanced credit allocation efficiency.

Green innovation is increasingly becoming a key way to address environmental issues. Due to the negative impact of green patent bubbles on sustainable development, this paper emphasizes the significance of green innovation quality. Using data from China’s A-share listed companies from 2008 to 2020, this paper investigates the impact of corporate social responsibility (CSR) on green innovation quality. The findings suggest that CSR promotes high-quality green innovation while inhibiting low-quality green innovation. Willingness to innovate and ability to innovate are the mechanisms through which CSR influences high-quality green innovation.

This study examines the impact of strategic alliances on corporate green innovation. We find that strategic alliances significantly promote corporate green innovation. Mechanism tests indicate that strategic alliances promote green innovation through channels of attracting market attention, alleviating agency problems, and stimulating collaborative innovation. Heterogeneity analysis demonstrates that the effects of strategic alliances are more pronounced for firms in areas with stringent environmental regulations and a favorable business environment, and firms facing intense product market competition. The findings provide new insights into the green transformation and upgrading of enterprises.

This paper examines the spillover effect of environmental regulations on firms’ green technological innovation, from the perspective of supply chain relationships. Analyzing data from Chinese listed companies, we find that the average environmental regulatory pressure faced by the client firms of a supplier firm enhances the green patent applications filed by the supplier firm, indicating that environmental regulatory pressure from clients spills over to suppliers. When the industries of suppliers are more competitive or the proportion of their sales from the largest client is higher, suppliers feel more pressured to engage in green innovation, resulting in more green patent applications. Thus, via their negotiation power, client firms can prompt supplier firms to innovate to meet their demand for green technologies. Finally, we show that this effect is particularly pronounced when supplier firms are located in highly marketized regions, receive low R&D government subsidies, or have high ESG ratings.

This study investigates whether common auditors have an impact on firms’ green innovation. Using a sample of Chinese listed firms, we find the common auditor ties to firms with green patents are positively related to focal firms’ green innovation. When examining underlying mechanisms behind such effects, we observe that our main findings are more profound for focal firms with more opaque information, communicating with auditors intensively and audited by senior auditors, which indicates information sharing serves as the plausible mechanism. Cross-sectionally, our findings are more remarkable for non-SOEs, firms with lower financial constraints, firms located in regions with environmental courts, local auditors, auditors with green auditing abilities and firms in the same industry. Further analysis suggests that the common auditor ties to firms with green patents can further improve focal firms’ environmental performance and green patent citations, which in turn boosts market share of involved audit firms. Overall, we document that common auditors have a positive spillover regarding green innovation to connected clients through transferring valuable green expertise in a legitimate way.

The influence of informal institutions such as history and culture on corporate behavior has been widely recognized, but few studies have been analyzed from the perspective of the ruling party culture. Based on the data of the old revolutionary base areas (ORBA) in China, this paper makes an empirical test on the role of Red Culture in promoting enterprises green innovation. First, this paper finds that the stronger the Red Culture in the region where the enterprise is located, the higher the level of green innovation.Secondly, in the samples with high political sensitivity and less cultural conflict, the promoting effect of Red Culture is more obvious. This paper not only expands the relevant literature on the influence of informal system on enterprise green innovation, but also enriches the research on the influence of Chinese unique culture on enterprise management decision-making.

Green finance has drawn increased worldwide attention from policymakers as a financial mechanism that could potentially encourage corporations to actively engage in sustainable activities. However, despite a growing body of studies investigating the economic outcomes of green financial policies, there is still a lack of research that systematically quantifies the social welfare implications of green finance. Hence, this study aims to fill this research gap by establishing the causal effect of green finance on corporate environmental responsibility. Exploiting the "bottom-up" enforcement of the green finance pilots in 2017 in China as a quasi-natural experiment and the difference-in-difference-in-difference identification strategy, we find that green finance significantly enhances corporate environmental responsibility performance in high-polluting industries relative to their counterparts, and this evidence continues to survive a battery of robustness checks. Moreover, we explore three underlying mechanisms that possibly explain this beneficial effect: risk-taking, external governance and financing channels. Furthermore, we uncover that corporate environmental responsibility serves as a plausible non-economic channel that combines green finance with economic benefits by stimulating green innovation, promoting total factor productivity and expanding market share. Overall, our study offers new insights on both the economic and non-economic consequences of green finance on business performance.

Taking the Stock Connect scheme as an exogenous shock based on data of China’s Ashare non-financial listed companies from 2009 to 2021, we identify the causal effect of stock market liberalization on green innovation. The baseline result based on a staggered difference-indifferences (DID) model suggests that stock market liberalization promotes corporate green innovation and this effect is similar to the green benefits of China’s mandatory environmental regulations. The results are robust to various checks, including the parallel trend tests, placebo tests, and the heterogenous time-varying treatment test based on Bacon decomposition and the DIDM approach. The enhanced continuity of corporate financing, improved corporate green governance and increased firm external technological collaboration are three plausible channels that allow stock market liberalization to promote corporate green innovation. Moreover, the effect is more significant for clean firms, non-SOEs, and firms in a good institutional environment. Further analysis suggests that the green innovation-enhancing effects of stock market liberalization are more likely to be high-quality innovation. Our paper provides new insights into understanding the green benefits of stock market liberalization and achieving sustainable economic development in developing countries.

Green innovations are crucial in promoting environmental sustainability, especially in the long run. Environmental pollution liability insurance (EPLI) facilitates firms better dealing with pollution-related risks, encouraging firms to invest in green innovation activities. This paper studies the impact of firms’ EPLI coverage on green innovation activities using data from Chinese heavily polluting firms. Results show that EPLI increases firms’ green innovations, both in terms of quantity and quality. Further mechanisms study suggests that EPLI improves the cash flow conditions and reduces agency costs of the board, which explains the positive effect of EPLI on green innovations.

The caliber of export products is a microcosmic reffection of economic development quality. This study seeks to elucidate the inffuence of environmental regulation on product quality, integrating the role of the skill premium as shaped by environmental regulation within a Dixit-Stiglitz CES production function model. Additionally, we empirically scrutinize the interplay between environmental regulation, skill premium, and product quality, utilizing Chinese customs export data in conjunction with data from listed companies spanning 2003-2015. The conclusions drawn from our theoretical analysis and empirical veriffcation reveal an inverted U-shaped relationship between environmental regulation and product quality, which is tempered by the skill premium. Moreover, a signiffcant positive correlation exists between environmental regulation and the skill premium. Similarly, the relationship between the skill premium and product quality manifests an inverted U-shape. Notably, an elevated skill premium markedly bolsters the enhancement of product quality through green innovation. These insights underscore the need for balanced environmental regulations and strategic investment in skilled labor to augment product quality. This serves as a valuable compass for policymakers and businesses endeavoring for green innovation and high-quality, sustainable economic growth.