Greening through central inspection: The role of legitimacy pressure and risk-taking

Olga Kopyrina, Kai Wu and Zhanyu Ying

Pacific-Basin Finance Journal, 2023, vol. 77, issue C

Abstract: We evaluate the effect of the Central Environmental Protection Inspection (CEPI) in China on green innovation for Chinese A-share firms from 2008 to 2019. The results of the difference-in-differences estimation show that the CEPI has a long-term positive effect on corporate green innovation in the form of green patents. The CEPI influences corporate green innovation through legitimacy pressure and value-enhancing corporate risk-taking. The positive effect is more pronounced in the provinces which are relatively more developed and less dependent on the secondary industry. Moreover, this effect is primarily driven by overcompliance motive and is visible in firms with better internal governance, state-controlled firms, and firms with political connections. Our findings demonstrate the impact of campaign-style central supervision on corporate innovation policy.

Keywords: Central environmental protection inspection; Green innovation; Legitimacy pressure; Corporate risk-taking (search for similar items in EconPapers)
JEL-codes: G31 Q55 Q58 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:77:y:2023:i:c:s0927538x22001895

DOI: 10.1016/j.pacfin.2022.101894

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