Environmental policy uncertainty and corporate green innovation: evidence from China

Abstract

PurposePrevious studies have mostly discussed the impact of environmental policy on enterprise innovation, but the discussion on how turbulence in environmental policy may affect firms' green innovation has been insufficient. This paper explores the effect of environmental policy uncertainty on corporate green innovation in the turnover of environmental protection officials (EPOT) context.Design/methodology/approachThe authors manually collected the data on the EPOT of 280 Chinese prefecture-level cities, and used the Poisson regression model to conduct empirical analyses based on the panel data of 1472 Chinese listed manufacturing firms from 2008 to 2017.FindingsThe results show that environmental policy uncertainty leads firms to reduce their green patent applications only for green invention patent applications. Such an effect is more pronounced in non-state-owned enterprises (non-SOEs). In addition, when the new directors of the Ecology and Environmental Bureau take office through promotions or are no more than 55 years old, the negative effect is more obvious, but there is no significant difference regardless of whether new directors have worked in environmental protection departments.Originality/valueFirst, this paper supplements the research on the antecedents of corporate green innovation from the perspective of environmental policy uncertainty and extends the applications of real options theory. Second, this paper expands the research on the government–business relationship from the EPOT perspective.

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“…When enterprises face the pressure of environmental regulation, they will weigh the cost of environmental penalties against the benefits of green innovation (He et al, 2022). Environmental regulation determinants can include a series of environmental punishments (Karydas and Zhang, 2019), a low-carbon city policy (Zhang W. et al, 2020), green tax (Li et al, 2021), emission rights, and carbon emission zone trading market policy (Huang et al, 2022). Innovation in cost-effective emission reduction has significant potential for enterprises' development.…”

Benefit synergy or “fishing in troubled waters”? Economic policy uncertainty and executive perquisite consumption

“…First, this study contributes to the research on corporate governance by showing how different EPUs influence executives' behaviors. Although prior studies consider how environmental uncertainty influences firm decision (Cong and Howell, 2021;He et al, 2020;Huang et al, 2022;Wang et al, 2014), we advance relative studies by showing that this uncertainty embedded in a firm's external environments influences executive perquisite consumption. Our study further finds that EPU stimulates managers' opportunistic behavior through the company's internal and external environments, significantly enhancing agency conflicts and thereby exacerbating the actual economic downturn during the economic crisis.…”

“…First, it contributes to the research on corporate governance by showing how EPU influences executives' behaviors. Although prior studies consider how environmental uncertainty influences firm decision (Cong and Howell, 2021;He et al, 2020;Huang et al, 2022;Wang et al, 2014), we advance relative studies by showing that this uncertainty embedded in a firm's external environments can influence executive perquisite consumption. To our best knowledge, this study is the first to research the impact of EPU on executive perquisite consumption.…”

“…Although prior studies consider how environmental uncertainty influences firm decision (Cong and Howell, 2021; He et al. , 2020; Huang et al. , 2022; Wang et al.…”

Political Influence and firms’ behavior in the framework of transition risk: Evidence from a Survey of EU enterprises

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