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The economic effect of prosecutorial public interest litigation policy on corporate green innovation

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  • Wei, Jia
  • Wang, Xiaoyang
  • Zhang, Caijun
  • Chang, Chao-Wen

Abstract

This study considered the Prosecutorial Public Interest Litigation Policy as a quasi-natural experiment and applied the staggered DID method to explore the relationship between environmental regulation enforcement and corporate green innovation using data on Chinese listed companies from 2008 to 2022. Prosecutorial Public Interest Litigation Policy was found to positively influence the quality of corporate green innovation, while the quantity remained unaffected. The disincentive effects caused by Prosecutorial Public Interest Litigation Policy impose high financial burdens on firms, thus hindering the improvement of innovation quality. Due to the trade-off between the deterrent and nudge effects, the positive role applies only to state-owned enterprises and large enterprises, while the negative influences affect the innovation applications of private enterprises and small enterprises. Further analysis suggests that environmental enforcement may indirectly promote corporate green innovation by stimulating firms' R&D investments, or it may induce more corporate green innovation reporting by increasing litigation risk. In addition, PPILP may lead to imitation by industry partners through the "partner effect" and may synergistically amplify the positive effects of green credit policies.

Suggested Citation

  • Wei, Jia & Wang, Xiaoyang & Zhang, Caijun & Chang, Chao-Wen, 2026. "The economic effect of prosecutorial public interest litigation policy on corporate green innovation," Economic Analysis and Policy, Elsevier, vol. 92(C), pages 663-683.
    • Handle: RePEc:eee:ecanpo:v:92:y:2026:i:c:p:663-683
    DOI: 10.1016/j.eap.2026.06.017
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