Abstract
This paper explores the relationship between corporate financialization and green innovation with a sample of A-share listed companies in China from 2012 to 2022. It is found that the crowding-out effect of corporate financialization on green innovation is greater than the reservoir effect, thus inhibiting green innovation. However, internal control capability and equity incentives can alleviate principal-agent conflicts and prompt corporate managers to reduce the negative impacts of financialization on green innovation in the long run, further revealing the decision-making process of how corporate managers weigh short-term financial interests against long-term innovation development.
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