Work

Does green innovation promote financial performance of Chinese listed companies?

Year: 2025

Type: article

Abstract: This study explored the impact of green innovations on a firm’s financial performance over time, considering the short-term, transitional and long-term effects. Using data from 4291 Chinese A-share listed companies between 2004 and 2021, we applied a novel long-difference multi-level fixed-effects approach to gain new insights. The findings suggest that the impact of green innovation on return on assets (ROA) is contingent upon the type of innovation, time frame and market conditions. During the transitional phase, the overall level of green innovation and its quality positively influence ROA. However, in the long run, the quantity of green innovation may adversely affect ROA. In addition, leverage emerges as a significant determinant of ROA across firms. Quantile analysis further revealed that green innovation benefits firms with lower ROA but may negatively impact those with higher ROA. These results offer valuable guidance for policymakers and corporate strategists seeking to optimise green innovation strategies for sustainable financial performance.

Source: Journal of Innovation & Knowledge

DOI: 10.1016/j.jik.2025.100740

Authors: Chanjuan Zhang, Ying Ma, Enming Zhang

Institution: Wuhan University of Technology

Language: English

Topic: Environmental Sustainability in Business

Subfield: Marketing

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Climate action, Industry, innovation and infrastructure

Open Access status: gold

Estimated APC paid: $2,200