Do environmental regulations and financial constraints stimulate corporate technological innovation? Evidence from China
Xin Ding and
Journal of Asian Economics, 2021, vol. 72, issue C
Does China achieve the Porter effect which states a win-win development of economy and environment? Besides environmental regulations (ER), financing is a critical factor affecting corporate technological innovation (TI). This study develops an integrated model to empirically investigate the interrelationship between ER, financial constraints (FC), and TI. The model is tested to make use of the Driscoll–Kraay standard error estimation and various regression models, based on detailed Chinese listed ﬁrm-level data covering the period from 2011 to 2017. Our baseline results show that ER have produced a crowding out effect of R&D input and inhibited patent outputs; as a consequence, the “weak” version of the Porter hypothesis is not underpinned in A-share stocks listed firms. Further tests indicate that FC have a mediating effect on the relationship between ER and TI. The moderating effect of FC between ER and TI is mixed. The effect of ER on TI is affected by the threshold effect of FC—the lower FC can better support the innovation compensation effect or alleviate the crowding out effect of ER. Thus, our findings offer new ideas for supporting financing mechanism of environmental governance to stimulate R&D innovation of listed companies.
Keywords: Environmental regulations; Financial constraints; Corporate technological innovation; Mediator and moderator; Threshold model (search for similar items in EconPapers)
JEL-codes: G18 G30 M11 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:72:y:2021:i:c:s1049007820301457
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