Fiscal and Tax Policies, Access to External Financing and Green Innovation Efficiency: An Evaluation of Chinese Listed Firms

Jiahui Xu, Chee-Pung Ng (), Toong Hai Sam, Asokan Vasudevan, Poh Kiong Tee, Alex Hou Hong Ng and Wong Chee Hoo
Additional contact information
Jiahui Xu: International Education College, Hebei Finance University, Baoding 071051, China
Chee-Pung Ng: Faculty of Business and Communications (FBC), INTI International University, Persiaran Perdana BBN, Putra Nilai 71800, Malaysia
Toong Hai Sam: Faculty of Business and Communications (FBC), INTI International University, Persiaran Perdana BBN, Putra Nilai 71800, Malaysia
Asokan Vasudevan: Faculty of Business and Communications (FBC), INTI International University, Persiaran Perdana BBN, Putra Nilai 71800, Malaysia
Poh Kiong Tee: School of Marketing and Management, Asia Pacific University of Technology & Innovation, Technology Park Malaysia Bukit Jalil, Kuala Lumpur 57000, Malaysia
Alex Hou Hong Ng: Faculty of Business and Communications (FBC), INTI International University, Persiaran Perdana BBN, Putra Nilai 71800, Malaysia
Wong Chee Hoo: Faculty of Business and Communications (FBC), INTI International University, Persiaran Perdana BBN, Putra Nilai 71800, Malaysia

Sustainability, 2023, vol. 15, issue 15, 1-19

Abstract: China has placed significant importance on the development of a circular economy and achievement of sustainable prosperity. It employs multiple fiscal and tax policies to facilitate clean production and improve resource efficiency by fostering corporate green innovation. Policy signalling boosts companies’ external funding, including debt and equity. As such, this research focuses on how government subsidies and tax incentives influence corporate green innovation efficiency, accounting for the mediating roles of debt financing and equity financing. Under the SBM model, we utilise the Luenberger index to quantify green innovation efficiency. In addition, the fixed-effect regression with 19,228 firm-year observations from 3549 firms between 2015 and 2021 is used. Based on empirical findings, government subsidies reduce green innovation efficiency, while tax incentives increase it. In addition, debt financing mediates the association between tax incentives and corporate green innovation efficiency. Furthermore, government subsidies and tax incentives play more significant roles in non-state-owned enterprises (non-SOEs) and for businesses in growing and mature stages than other listed firms. To improve access to external financing and green innovation efficiency, it is suggested that the government implement various government subsidies or tax incentives according to business characteristics, with each company applying policies customised to its specific circumstances.

Keywords: green innovation efficiency; government subsidies; tax incentives; debt financing; equity financing; ownership; life cycle; SBM–Luenberger index (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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