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The role of principal-agent in corporate financialization and green innovation

Author

Listed:
  • Huang, Yijing
  • Xu, Zongyu

Abstract

This paper explores the relationship between corporate financialization and green innovation with a sample of A-share listed companies in China from 2012 to 2022. It is found that the crowding-out effect of corporate financialization on green innovation is greater than the reservoir effect, thus inhibiting green innovation. However, internal control capability and equity incentives can alleviate principal-agent conflicts and prompt corporate managers to reduce the negative impacts of financialization on green innovation in the long run, further revealing the decision-making process of how corporate managers weigh short-term financial interests against long-term innovation development.

Suggested Citation

  • Huang, Yijing & Xu, Zongyu, 2024. "The role of principal-agent in corporate financialization and green innovation," Finance Research Letters, Elsevier, vol. 63(C).
    • Handle: RePEc:eee:finlet:v:63:y:2024:i:c:s1544612324004215
    DOI: 10.1016/j.frl.2024.105391
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