The examination of resource tax reform facilitating firms’ green innovation in resource-related industry in China

Abstract

The impact of resource tax reform on green innovation in resource related industry at micro-firm level is still unknown. By matching data from resource-associated firms in China's A-share market with green patent database from State Intellectual Property Office from 2000 to 2017, and applying Generalized Method of Moments (GMM) and difference-in-difference (DID), the research results demonstrate that resource tax reform significantly facilitates firms' green innovation in resource industry and executive compensation intensifies the promoting effect. Further study reveals enterprise profitability works as an intermediary enhancing effect. Our findings on some degree coincide the literature like emissions trading scheme promoting green innovation, which emphasizes ex post or from emission consequences. In contrast, this paper focuses on levying resource tax that is limited to mineral resource-related firms and at the source of resource exploitation, and treats micro-firms as the main body of research unlike existing literature at macro level. More importantly, this paper combines GMM-DID models to solve endogeneity problem. Furthermore, this paper explores the mediating and moderating effects by corporate profitability and executive compensation, which have been neglected by the literature.