Regulatory Centralization and Corporate Green Innovations: Evidence from Personnel Authority Reform in China
61 Pages Posted: 31 Jul 2024
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Regulatory Centralization and Corporate Green Innovations: Evidence from Personnel Authority Reform in China
Regulatory Centralization and Corporate Green Innovations: Evidence from Personnel Authority Reform in China
Date Written: July 21, 2024
Abstract
This study links the institutional changes of personnel appointment authority in regulatory agencies with corporate green innovation. Our difference-indifferences design leverage staggered turnovers of local Environmental Protection Bureaus directors appointed under centralized institution as a plausible exogenous shock. The findings reveal that environmental authority centralization increased corporate green innovation by 4.3% and improve firm sustainability of green innovation by 33.3%. Three key mechanisms driving this green innovation are identified: (1) encouraging firms to allocate R&D resources to support green innovation and enhancing the productivity of specialized green inventors; (2) promoting firm efforts in environmental investments and governance projects; and (3) strengthening incentives for obtaining green subsidies and complying with regulatory standards. Additionally, female directors of centralized environmental authority and those with party-related education backgrounds are more effective in improving corporate green innovation efforts, while directors with local government ties or violation histories are less effective. This research highlights the role of institution in shaping corporate green innovation and offers valuable insights for policymakers and managers aiming to advance green development.
Keywords: Green Innovations, Regulatory Centralization, Personnel Authority Reform, China
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