Government audit, innovative activities, and green development

Abstract

ABSTRACTFrom the perspective of national governance, the panel data collected from 30 provinces in China between 2007 and 2019 are used in this paper to empirically test the impact of government audits on green development. Also, multiple models are applied to explore its underlying mechanism from the perspective of innovative activities. The research results show that government audit plays a significant role in promoting green development, which holds even after robustness tests are conducted either by replacing government audit indicators, adopting the GMM system model, applying Heckman’s two-stage model, or using micro-enterprise data. From an economic point of view, innovation plays a major part in promoting green development through government audits. There is also a significant trend of regional heterogeneity as shown in the effect of government audits on green development. The promoting effect reaches a more significant extent in the eastern region than in other regions. According to the results of a further expansion analysis, government auditing exerts significant non-linear effects and spatial spillover effects on green development.