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How mayors’ promotion incentives shape corporate green innovation disclosure? Evidence from China’s New Environmental Protection Law

Jiaqi Li, Rui Sun and Mingduo Zhao

International Review of Financial Analysis, 2025, vol. 103, issue C

Abstract: We investigate the impact of mayors’ promotion incentives on corporate green innovation disclosures following China’s implementation of the New Environmental Protection Law (NEPL) in 2015. The NEPL signaled a nationwide escalation in environmental regulations. Although firms governed by high-promotion-incentivized mayors disclosed fewer green innovations than firms governed by low-promotion-incentivized mayors, they increased their green innovation disclosures more significantly after the NEPL implementation. Our results capture the dynamics of corporate green innovation disclosure around NEPL implementation by measuring firm green innovation disclosure using neural network-based machine-learning techniques. Furthermore, this improvement in green innovation disclosure is more pronounced for firms in pollution-heavy industries, firms with political ties, and those facing high litigation risks. Lastly, environmental media coverage and investigation mechanisms amplify the positive effect of mayors’ promotion incentives on green innovation disclosures. Our study highlights the age factor in local politicians’ promotion incentives for corporate green innovation disclosure.

Keywords: Promotion incentives; Environmental law; Green innovation disclosures; Mayor age; Deep neural network (search for similar items in EconPapers)
JEL-codes: D23 G38 O30 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:103:y:2025:i:c:s1057521925002686

DOI: 10.1016/j.irfa.2025.104181

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