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Deleveraging and green technology innovation: Evidence from Chinese listed companies

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  • Wang, Si-Meng
  • Wang, Miao
  • Feng, Chao

Abstract

To address the relationship between 'deleveraging' and 'green development transformation', it is necessary to seek a leverage ratio that promotes green technology innovation and avoids financial risk. Using fixed-effects models, this study empirically examines the influence of a company's leverage ratio on green technology innovation based on the annual data of Chinese listed companies from 2007 to 2022. The results show that: (1) there is an inverted U-shaped relationship between the leverage ratio and green technology innovation, with a turning point of 51.79%; (2) Short-term leverage has a more noticeable effect on green technology innovation than long-term leverage. Commercial credit promotes green technology innovation, while bank lending has been proven to damage green technology innovation; (3) There are distinct heterogeneous effects of company’s leverage on green technology innovation among Chinese listed companies owing to ownership, scale, and industry; (4) Leverage affects green technology innovation through R&D investment and financial distress.

Suggested Citation

  • Wang, Si-Meng & Wang, Miao & Feng, Chao, 2024. "Deleveraging and green technology innovation: Evidence from Chinese listed companies," Research in International Business and Finance, Elsevier, vol. 69(C).
    • Handle: RePEc:eee:riibaf:v:69:y:2024:i:c:s0275531924000825
    DOI: 10.1016/j.ribaf.2024.102289
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    More about this item

    Keywords

    Leverage; Green technology innovation; Leverage structure; Company heterogeneity;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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