The Impacts of Executive Equity on Green Corporate Innovation

Abstract

Executive stock incentives, as an important tool for attracting talent and achieving long-term development goals, have a profound impact on the development of green innovation in enterprises. Based on this, this article uses data from Chinese listed companies from 2007 to 2020 and employs a two-way fixed effects model and a two-stage least squares method to explore the impact of executive stock incentives on green innovation in China. The study found that executive stock incentives have a significant positive impact on green innovation in enterprises. This promotional effect is more pronounced in non-state-owned enterprise groups characterized by operating losses, reduced institutional holdings, and fewer negative media reports. Mechanism analysis suggests that increasing the intensity of executive stock incentives can enhance profitability, increase tolerance for failure, and promote increased investment in green innovation. Finally, based on the conclusions, relevant policy implications are drawn.

Executives’ academic experience and corporate social responsibility: A case study in China

“…Family business helps firms to innovate [ 7 ] and improve performance [ 8 ], thus promoting the enterprise’s sustainable development. Additionally, the enterprise can promote green innovation through the equity incentive of the executives to increase profits [ 9 ], and employee equity incentives can also effectively reduce costs and improve performance [ 10 ]. It has been argued that implementing external incentives can help reduce costs and improve performance.…”