The Relationship between the Political Connections and Green Innovation Development of Chinese Enterprises—Empirical Analysis Based on Panel Data of Chinese A-Share Listed Companies

Abstract

This paper uses the panel data of A-share listed companies on the Shanghai and Shenzhen stock exchanges from 2008 to 2019 as the original sample and uses panel two-way fixed-effect, panel Tobit and mediation effect models to study the impacts of political connections of Chinese enterprises on the development of green innovation and the impact mechanism. The results show that political connections will inhibit the development of green innovation and have a greater inhibitory effect on the numbers of enterprises’ alternative energy patents and administrative supervision design patents. This conclusion persists under a series of robustness tests. Further analysis shows that the impact of enterprises’ political connections on green innovation has significant regional heterogeneity, and the inhibition of green innovation is mainly reflected in the manufacturing industry. In terms of mechanism, political connections influence green innovation capacity through the R&D investment and excessive debt of enterprises. Finally, the paper provides advice for the government to formulate policy and suggestions for enterprise development.