Green investor behavior and corporate green innovation: Evidence from Chinese listed companies

Abstract

Businesses embracing green innovation can encourage high-quality green economic development in addition to reducing emissions. In this paper, we use the Difference-in-Differences (DID) to investigate the influence of green investor behavior on the green innovation of companies, using the first-ever green investor investment in a company as a quasi-natural experiment. According to research, green investors have the power to accelerate corporate green innovation greatly. Three key strategies that green investors can use to do this include raising institutional investment levels, enhancing the green perception of executives, and bringing in top talent. Heterogeneity analysis shows that non-high-polluting, big, and state-owned enterprises (SOEs) are more likely to benefit from green investors' green innovation effects. Further analysis reveals that (ⅰ) green investors' influence on an enterprise's level of green innovation can help it improve its ESG ratings; (ii) green investors can encourage green innovation in source control but have little effect on green innovation in end-of-pipe treatment; (ⅲ) green investors can support both non-green and green innovation in enterprises, but have a greater influence on green innovation. This study strengthens the micro relationship between green investors and corporate green innovation. It also supports the theoretical underpinnings of corporate green innovation, which is significant for advancing green innovation, environmental protection, and high-quality economic development in emerging economies.