Deleveraging and green technology innovation: Evidence from Chinese listed companies

Si-Meng Wang, Miao Wang and Chao Feng

Research in International Business and Finance, 2024, vol. 69, issue C

Abstract: To address the relationship between 'deleveraging' and 'green development transformation', it is necessary to seek a leverage ratio that promotes green technology innovation and avoids financial risk. Using fixed-effects models, this study empirically examines the influence of a company's leverage ratio on green technology innovation based on the annual data of Chinese listed companies from 2007 to 2022. The results show that: (1) there is an inverted U-shaped relationship between the leverage ratio and green technology innovation, with a turning point of 51.79%; (2) Short-term leverage has a more noticeable effect on green technology innovation than long-term leverage. Commercial credit promotes green technology innovation, while bank lending has been proven to damage green technology innovation; (3) There are distinct heterogeneous effects of company’s leverage on green technology innovation among Chinese listed companies owing to ownership, scale, and industry; (4) Leverage affects green technology innovation through R&D investment and financial distress.

Keywords: Leverage; Green technology innovation; Leverage structure; Company heterogeneity (search for similar items in EconPapers)
JEL-codes: G32 O31 O32 Q55 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:69:y:2024:i:c:s0275531924000825

DOI: 10.1016/j.ribaf.2024.102289

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