The impact of environmental information disclosure on green innovation in extractive enterprises: Promote or crowd out?

Abstract

Environmental information disclosure (EID) is an essential manifestation of a firm's Environment, Social, and Governance (ESG) strategy. However, there is no consensus on whether EID can improve extractive enterprise green innovation. Drawing on data from Chinese-listed extractive industries companies for the period 2002–2017, this paper disentangles the complex impact of EID on green innovation by using the difference-in-difference method. The results show that the EID policy improves the overall green innovation performance of the extractive firms, but this improvement is mainly driven by the utility model patents rather than green invention patents with higher innovation levels. The dynamic effects show that the green innovation effect of EID has an upward trend after a three-year lag. Moreover, the green innovation effect in regions with high information disclosure intensity and state-owned enterprises is more prominent. Moreover, the mechanism tests reveal that although the resource crowding-out effect will hinder green innovation activities, EID can stimulate firms to conduct green innovation activities by alleviating financing constraints, increasing internal incentives, and imposing external pressure. Our findings provide the necessary empirical support for the government to promote the voluntary instruments.