Regulation-induced financial constraints, carbon emission and corporate innovation: Evidence from China
Di Cui,
Mingfa Ding,
Yikai Han and
Sandy Suardi
Energy Economics, 2023, vol. 127, issue PB
Abstract:
Prior literature documents that in developed economies, tighter environmental standards may induce higher firm innovations. In contrast, using China's firm-level CO2 emissions data, this paper finds that firms with higher CO2 emissions are associated with lower corporate innovation. A 1% increase in carbon emissions reduces research and development (R&D) expenditures by about 4.3% to 6.3%, having controlled for endogeneity concerns. While technical and commercial uncertainty of innovation can deter high carbon-emitting firms from investing in R&D, we find that high carbon-emitting firms are financially constrained when faced with exorbitant pollution-related expenses. Instead, such firms acquire firms with green assets and purchase low-polluting target assets to mitigate environmental pollution. The results are more pronounced in firms with poor corporate governance, resource-constrained non-SOEs, and highly polluting firms. Our results remain robust for different measures of R&D expenditures, green R&D and different components of carbon emissions.
Keywords: Carbon emission; R&D; Corporate innovation; Financial constraints (search for similar items in EconPapers)
JEL-codes: G30 G32 Q53 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (3)
Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988323005790
Full text for ScienceDirect subscribers only
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:127:y:2023:i:pb:s0140988323005790
DOI: 10.1016/j.eneco.2023.107081
Access Statistics for this article
Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant
More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu (repec@elsevier.com).