Abstract
This paper investigates whether foreign acquisitions improve green innovation among target firms in emerging markets. It employs a sample of 739 foreign acquisition deals made in China over the period of 2005–2019. The empirical results find that foreign acquisitions are associated with target firms' green innovation strategies. We further explore the influence mechanism that operates between foreign acquisitions and firms' green innovations in host countries based on financial constraints. The results show that foreign acquisitions can improve target firms' green innovations by relieving financial constraints. The study also provides evidence that the effects of foreign acquisitions on green innovation vary across target firms’ ownership types.
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