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The impact of capital leverage on green firms’ investment: New evidence regarding the size and age effects of Chinese green industries

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  • Chang, Kai
  • Ding, Jiehuan
  • Lou, Qichun
  • Li, Zesheng
  • Yang, Jiahui

Abstract

This article primarily and specifically focuses on 412 sample green firms from the green industries in China and contributes by investigating the leverage -investment associations based on firm-specific sizes and ages using the generalized method of moments (GMM) firm-level panel data analysis approach. The book value of leverage has a negative impact on green-firm investment. Meanwhile, the market value of leverage and debt maturity have positive impacts on green-firm investment when including the new dimensions of firm-specific size and age. A greater firm size and older firm age can reduce the marginal effects of the book value of leverage and the market value of leverage on green-firm investment. These results provide new contributions focusing on how green firm-specific size and age affect the leverage-investment nexus.

Suggested Citation

  • Chang, Kai & Ding, Jiehuan & Lou, Qichun & Li, Zesheng & Yang, Jiahui, 2021. "The impact of capital leverage on green firms’ investment: New evidence regarding the size and age effects of Chinese green industries," Finance Research Letters, Elsevier, vol. 38(C).
    • Handle: RePEc:eee:finlet:v:38:y:2021:i:c:s1544612319307901
    DOI: 10.1016/j.frl.2020.101529
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