Fiscal & tax incentives, ESG responsibility fulfillments, and corporate green innovation performance

Hong Yin, Lu Zhang, Chuangneng Cai, Zenglian Zhang and Qihong Zhu

International Review of Economics & Finance, 2025, vol. 98, issue C

Abstract: Carrying out green technological innovation is a necessary way for enterprises to realize high-quality development, and government fiscal and tax incentive policy is an important initiative to promote enterprises' green technological innovation. This paper selects the A-share listed enterprises on the Shanghai and Shenzhen Stock Exchanges from 2018 to 2022 as research samples to empirically test the impact of fiscal and tax incentive policies on the green innovation performance of enterprises. The results of the study show that fiscal and tax incentive policies enhance the green innovation performance of enterprises, with both government subsidies and tax incentives significantly promoting the green innovation performance of enterprises. The mechanism test finds that the fiscal and tax incentive policies enhance the green innovation performance of enterprises mainly through the fulfillment of ESG responsibilities, as reflected explicitly in the fact that the fiscal and tax incentive policies can better enhance awareness of enterprise environmental responsibility, promote the fulfillment of corporate social responsibility, and improve the corporate governance system. Further test results show that both fiscal and tax incentive policies in state-owned and non-state-owned enterprises significantly promote corporate green innovation performance. Moreover, fiscal and tax incentive policies in Central China significantly promote corporate green innovation performance. In contrast, government subsidies in Eastern China significantly promote corporate green innovation performance, but the promotion effect is lower than that in Central China. This paper expands on the role of fiscal and tax incentive policies in influencing the green innovation performance of enterprises, which is of great significance in helping the government to change the direction and focus of fiscal and tax incentive policies promptly in order to improve the efficiency of those policies and better promote the green innovation of enterprises.

Keywords: Fiscal and tax incentives; Green innovation performance; ESG responsibility fulfillment (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:98:y:2025:i:c:s1059056025000012

DOI: 10.1016/j.iref.2025.103838

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