Navigating climate policy uncertainty: Impacts on continuous innovation in corporations

Shixian Ling, Hui Xia, Liu, Zhangxin (Frank), Sirimon Treepongkaruna and Samara Haroon

Finance Research Letters, 2025, vol. 71, issue C

Abstract: We explore the impact of Climate Policy Uncertainty (CPU) on continuous innovation within enterprises amid the escalating challenges of climate change. By applying textual analysis to quantify CPU in China, our findings reveal a significant positive relationship between CPU and continuous innovation. CPU emerges as a significant driver of continuous innovation, which holds up against various robustness and endogeneity checks. Specifically, CPU fosters innovation by promoting greater international diversity on boards and reducing inefficient investments. Our paper highlights the strategic importance of embracing policy-induced uncertainty as an opportunity for advancing innovation and green transformation.

Keywords: Climate policy uncertainty; Continuous innovation; Green transformation (search for similar items in EconPapers)
JEL-codes: G32 G38 O32 Q54 Q58 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:71:y:2025:i:c:s154461232401465x

DOI: 10.1016/j.frl.2024.106436

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