Analysts’ Green Coverage and Corporate Green Innovation in China: The Moderating Effect of Corporate Environmental Information Disclosure

Abstract

Against the backdrop of China’s growing environmental concerns, investing in green technology innovation is a crucial solution to achieve the goal of “carbon peak and carbon neutrality”. Combining the perspectives of signaling theory and corporate governance theory, we use a sample of Chinese-listed companies from 2008 to 2020 to investigate the influence of analysts’ green coverage (AGC) on corporate green innovation (CGI) and the moderating effect of corporate environmental information disclosure (CEID) based on a textual analysis approach. The results show that AGC can significantly promote the quantity and quality of CGI, and CEID has a positive moderating effect on the process. Moreover, the mechanism analysis reveals that enhancing investors’ value recognition, improving corporate reputation capital, alleviating corporate financing constraints, reducing management agency costs, and curbing managerial myopia are the influence mechanisms of AGC on CGI. Additionally, the positive effect of AGC is more significant for firms located in regions with a favorable institutional environment, firms belonging to heavily polluting industries, and firms that have not adopted continuous innovation strategies.

Tapping into the green potential: The power of artificial intelligence adoption in corporate green innovation drive

“…The finding stays in parity with (Han et al, 2024) who empirically showed the significant improvement in greenovation due to finalysts coverage. Additionally, we are also in line with (Hu et al, 2023) who found that analysts' green coverage significantly promotes the quantity and quality of greenovation.…”

“…Second, being considered as the information lubricants, finalysts can accelerate the speed and breadth of information transmission pertaining to AIA and greenovation, which can enhance the corporate image and alleviate the degree of external financial constraints (Hu et al, 2023). Additionally, finalysts' more concentration on AIA and greenovation may facilitate the acquisition of greenovation financing through green credit, green bonds, and green insurances which further develops the green initiatives (Hu et al, 2021; Yu et al, 2021).…”

“…Secondly, finalysts act as information lubricants, accelerating the speed and breadth of information transmission related to AIA and greenovation. This not only enhances the corporate image but also helps alleviate external financial constraints (Hu et al, 2023). Lastly, firms that receive greater finalysts coverage tend to attract more attention from investors and experience higher levels of publicity (Gentry & Shen, 2012).…”

Environmental Protection Tax and Green Innovation: The Mediating Role of Digitalization and ESG

“…The empirical results are shown in columns ( 3) and (4) of Table 9, and the coefficients of the interaction term (EPT × ANA) are significantly positive at the 1% level, indicating that the analyst coverage positively regulates the relationship between EPT and GI. These findings are consistent with the findings of [75]. The moderating effects of analyst coverage shown in Figure 5 support the robustness of our findings.…”

“…Secondly, earnings forecast reports from financial analysts create supervision pressure on firms' environmental governance projects. This pressure forces corporate executives to assume responsibility for environmental impact and reduce short-sighted and agency costs, and it encourages their commitment to the improvement of GI [75]. Due to the alleviation influence of information asymmetry, analyst coverage can strengthen the impact of EPT on GI.…”