The impact of emission charges on the quality of corporate innovation: Based on the perspective of breakthrough technological innovation

Abstract

As China's longest-implemented market-based environmental regulation policy, emission charges have contributed outstandingly to improving the ecological environment and reducing firms' pollution emissions. We assess the impact of emission charges on the innovation quality of Chinese firms based on the perspective of firms' breakthrough technological innovation. By observing Chinese A-share listed firms with heavy pollution from 2011 to 2020, we find that corporate breakthrough technological innovation positively moderates the emission charges to enhance the quality of corporate innovation. Our mechanism tests suggest that emission charges and breakthrough technological innovation positively affect innovation quality by improving the means of green innovation of enterprises. In addition, heterogeneity analysis shows that emission charges and firms' breakthrough technological innovation are only effective in improving the innovation quality of state-owned firms, and the effect on the innovation quality of non-state-owned firms is not significant. Our findings suggest that the imposition of emission charges and incentives for firms to embark on breakthrough technological innovation can effectively improve the quality of innovation.