Journal
FINANCE RESEARCH LETTERS
Volume 53, Issue -, Pages -Publisher
ACADEMIC PRESS INC ELSEVIER SCIENCE
DOI: 10.1016/j.frl.2022.103624
Keywords
Environmental regulation; Green innovation; Internal governance; External governance
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This study examines the effect of environmental regulation on firms' green innovation in China's heavy-polluting industry. The findings show that environmental regulation has a significantly positive effect on firms' green innovation, especially for firms with poorer internal and external governance. In addition to promoting firm green innovation, environmental policies also benefit firms' long-term development.
This study examines the effect of environmental regulation on firms' green innovation, as well as the heterogeneous effects among different firms. Using the sample of A-share listed firms in the heavy-polluting industry in China and the manually collected government-implemented environmental regulation from 2006 to 2018, we find strong evidence that environmental regulation has a significantly positive effect on firms' green innovation. Further, our results show that environmental regulation has a more prominent effect on firms with poorer internal and external governance. In addition to promoting firm green innovation, environmental policies can benefit firms' long-term development as well.
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