Does green innovation mitigate financing constraints? Evidence from China's private enterprises.

In recent years, corporate green innovation has become a hot topic in society and academia, but the relationship between green innovation and financing conditions is less frequently discussed. Based on stakeholder theory, this paper explores whether green innovation can alleviate corporate financing constraints. An empirical test using a sample of Chinese non-financial private enterprises listed in the Shanghai and Shenzhen exchange from 2012 to 2017 is established. The results of regression analyses show that green innovation, including green technology innovation and green management innovation, can significantly reduce the financing constraints of enterprises. Moreover, the interaction between corporate environmental disclosure and green innovation can have a positive effect, further improving the financing conditions of firms. These findings remain valid after endogenous and robustness testing including instrumental variables (IV), propensity score matching (PSM) and updated models. Additional research illustrates that green innovation plays a stronger role in alleviating financing constraints among heavily polluting enterprises. The above findings contribute to the literature concerning green innovation and corporate financing and provide a valuable reference for implementing green innovation, improving the financing environment and policy making. Image 1 • Green innovation, including green management innovation and green production innovation, can significantly reduce corporate financing constraints. • Environmental disclosure can alleviate the financing constraints of enterprises. • The interaction of corporate environmental disclosure and green innovation can have a positive effect, further improving the financing conditions of firms. • The green innovation of heavy polluters can better reduce financing constraints. [ABSTRACT FROM AUTHOR]