Local media sentiment towards pollution and its effect on corporate green innovation

Abstract

This study examines the effect of local media sentiment on corporate green innovation based on a textual analysis of China's provincial official party newspapers from 2007 to 2018. The results show that the negative sentiment in official media positively influences firms' green innovation, measured by the number of green patents and green patent citations. This positive effect is more pronounced when firms have weaker internal or external governance structures, when the regional punitive measures are less stringent, or when the incentive measures are more complete, suggesting that official media plays a governance role in corporate green innovation. Further analysis shows that the negative sentiment from market-oriented media impedes green innovation and does not affect the relationship between official media sentiment and green innovation. Taken together, our findings reveal the real effects of local media negative sentiment on technological progress and pollution controls through its pressure on firms to engage in green innovation.