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Navigating climate policy uncertainty: Impacts on continuous innovation in corporations

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Listed:
  • Ling, Shixian
  • Xia, Hui
  • Liu, Zhangxin (Frank)
  • Treepongkaruna, Sirimon
  • Haroon, Samara

Abstract

We explore the impact of Climate Policy Uncertainty (CPU) on continuous innovation within enterprises amid the escalating challenges of climate change. By applying textual analysis to quantify CPU in China, our findings reveal a significant positive relationship between CPU and continuous innovation. CPU emerges as a significant driver of continuous innovation, which holds up against various robustness and endogeneity checks. Specifically, CPU fosters innovation by promoting greater international diversity on boards and reducing inefficient investments. Our paper highlights the strategic importance of embracing policy-induced uncertainty as an opportunity for advancing innovation and green transformation.

Suggested Citation

  • Ling, Shixian & Xia, Hui & Liu, Zhangxin (Frank) & Treepongkaruna, Sirimon & Haroon, Samara, 2025. "Navigating climate policy uncertainty: Impacts on continuous innovation in corporations," Finance Research Letters, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:finlet:v:71:y:2025:i:c:s154461232401465x
    DOI: 10.1016/j.frl.2024.106436
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    More about this item

    Keywords

    Climate policy uncertainty; Continuous innovation; Green transformation;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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