Revealing the Effects of Corporate Governance on Green Investment and Innovation: Do Law and Policy Matter?

Abstract

Green investment (GI) and innovation performance are key factors of sustainable green development. GI and innovation have become a trendy solution to minimize environmental issues in the previous few decades. We investigate the effects of corporate governance, environmental law, and environmental policy stringency on GI and environmental innovation (EI) using Chinese time-series data from 1998 to 2020. Short and long-run findings indicate that corporate governance has a positive and significant impact on GI and innovation in China. However, environmental law has positive and significant effects on GI and innovation in the short run and long run. Furthermore, environmental policy stringency has an insignificant impact on GI but stimulates green innovation both in the short and long run. The study also reveals that education has a significant positive impact on green innovation both in the short and long-run. The short and long-run results propose essential policy implications.