Extreme high temperatures and corporate green innovation: Evidence from China

Meng Li, Jing Zhang and Tiecheng Leng

Pacific-Basin Finance Journal, 2025, vol. 93, issue C

Abstract: Global warming's extreme high temperatures pose a significant threat to socio-economic development. Drawing on data from China's A-share listed companies from 2002 to 2021, this study explores the impact of extreme high temperatures on corporate green innovation. The results show that extreme high temperatures significantly increase green innovation by driving up labor and electricity costs, intensifying financing constraints, and reducing investment levels—thus mitigating adverse effects on production and operations. This effect is more pronounced in non-SOEs, heavily polluting industries, firms led by executives with overseas experience or environmental backgrounds, firms receiving substantial government R&D subsidies, and those subject to strict environmental supervision. Additionally, green innovation enhances firm value, with stronger positive effects under higher levels of extreme high temperatures. Overall, this study provides novel micro-level evidence on how external factors influence corporate green innovation, offering valuable insights for managing climate risk and promoting China's transition to a green, low-carbon economy.

Keywords: Extreme high temperatures; Green innovation; Government R&D subsidies; Firm value; China (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:93:y:2025:i:c:s0927538x25001611

DOI: 10.1016/j.pacfin.2025.102824

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