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Air pollution and corporate green innovation in China

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  • Ma, Xinru
  • He, Jingbin

Abstract

Green innovation is crucial for modern firms to achieve green transformation in the context of sustainable development. Although some studies have shed light on the determinants of green innovation, little is known about whether ambient environmental factors play a role. Using data of Chinese listed firms from 2007 to 2019, we explore the association between air pollution and corporate green innovation. We find that ambient air pollution in firms’ headquarters is positively related to subsequent green innovation (hereafter, the AQI-GI relationship), consistent with stakeholder theory. This relationship is stronger for firms with more analyst reports, corporate site visits, and institutional ownership. Moreover, the AQI-GI relationship is robust based on the exogenous variation of air pollution extracted by strong wind and rainfall. Environmental protection law revision has a positive effect on the AQI-GI relationship. These findings suggest that firms actively respond to surrounding air conditions by implementing green innovation.

Suggested Citation

  • Ma, Xinru & He, Jingbin, 2023. "Air pollution and corporate green innovation in China," Economic Modelling, Elsevier, vol. 124(C).
    • Handle: RePEc:eee:ecmode:v:124:y:2023:i:c:s0264999323001177
    DOI: 10.1016/j.econmod.2023.106305
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    Cited by:

    1. Chunrong Yan & Xintian Xiang & Liping Li & Guoxiang Li, 2023. "Environmental Credit Constraints and the Enterprise Choice of Environmental Protection Behavior," Sustainability, MDPI, vol. 15(24), pages 1-24, December.
    2. Wang, Yong & Song, Chunyang & Wang, Wenhao, 2023. "Suppliers’ decision on green innovation: A response to customers’ environmental regulation," Finance Research Letters, Elsevier, vol. 58(PA).
    3. Gao, Yongjun & Mohd Saleh, Norman & Abdullah, Ahmad Monir & Adznan, Syaima, 2024. "Climate-related disclosures under the TCFD framework and business green innovation: Evidence from China A-share companies," Finance Research Letters, Elsevier, vol. 63(C).
    4. Chi, Yeguang & He, Jingbin & Ma, Xinru & Wu, Fei, 2023. "Air pollution and institutional investors' valuation bias during initial public offerings," Pacific-Basin Finance Journal, Elsevier, vol. 80(C).
    5. Wang, Weilong & Wang, Jianlong & Ye, Huiying & Wu, Haitao, 2024. "Polluted air, smarter factories? China's robot imports shed light on a potential link," Energy Economics, Elsevier, vol. 134(C).
    6. Chiu, Ya-Ling & Luo, Jinbo & Boscaljon, Brian L., 2024. "The Mist of corporate innovation," International Review of Economics & Finance, Elsevier, vol. 93(PB), pages 602-624.
    7. Ding, Yibing & Li, Jing & Tian, Yuqi, 2024. "The short and long-term effects of cross-border M&A network on Chinese enterprises’ green innovation," Economic Modelling, Elsevier, vol. 134(C).

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    More about this item

    Keywords

    Air pollution; Green innovation; Stakeholder requirement;
    All these keywords.

    JEL classification:

    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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