Environmental performance shortfalls and corporate green innovation: The role of green credit regulation

Li Meng, Taoyong Su and Jintao Zhang

International Review of Economics & Finance, 2024, vol. 96, issue PA

Abstract: This paper investigates the effects of environmental performance shortfalls on corporate green innovation. On the basis of the theoretical framework of environmental performance feedback and using a sample of eight major energy-consuming industries in China, a negative relationship is confirmed that environmental performance below but in the neighborhood of peer level makes firms more inclined to pursue green innovation. Higher risk-taking willingness for firms with environmental performance below but close to peer level strengthens innovative intention. This correlation is pronounced when corporate financial performance, green innovation performance, and executive compensation are below peer level. We also find that green credit constrained firms prefer to engage in innovation activities when their environmental performance is below but near peer level and they have fewer bank loans simultaneously. The findings offer insights into the innovation behavior of firms in response to environmental underperformance.

Keywords: Environmental performance; Performance shortfalls; Green innovation; Green credit (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:96:y:2024:i:pa:s1059056024006166

DOI: 10.1016/j.iref.2024.103624

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