IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v88y2026ics1544612325024985.html

Controlling shareholders’ share pledge and green innovation: Evidence from manufacturing companies

Author

Listed:
  • Fan, Yuqiong
  • Hong, Min
  • Xu, Lu
  • Yuan, Wei

Abstract

This study examines how controlling shareholders’ share pledge shape green innovation in manufacturing companies. Results show that controlling shareholders’ share pledge suppresses green innovation, particularly in less-polluting and non-state-owned enterprises. Mechanism analysis reveals that controlling shareholders’ share pledge constrain companies’ risk-taking and tighten their financing capacity, thereby limiting their ability to pursue green innovation. Further analysis distinguishes between substantive and strategic innovation, highlighting heterogeneous and time-varying effects. These findings uncover an underexplored cost of share pledge and provide new insights into the sustainability challenges faced by manufacturing companies.

Suggested Citation

  • Fan, Yuqiong & Hong, Min & Xu, Lu & Yuan, Wei, 2026. "Controlling shareholders’ share pledge and green innovation: Evidence from manufacturing companies," Finance Research Letters, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:finlet:v:88:y:2026:i:c:s1544612325024985
    DOI: 10.1016/j.frl.2025.109249
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612325024985
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2025.109249?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Du, Yanan & Guo, Qunna, 2023. "Green credit policy and green innovation in green industries: Does climate policy uncertainty matter?," Finance Research Letters, Elsevier, vol. 58(PC).
    2. Tobias Stucki, 2019. "What hampers green product innovation: the effect of experience," Industry and Innovation, Taylor & Francis Journals, vol. 26(10), pages 1242-1270, November.
    3. Hou, Xipei & Shen, Yinjie(Victor) & Xing, Jing & Zhou, Fuzhao, 2023. "Hastily announced: Mergers and acquisitions with pledging shareholders," Journal of Financial Stability, Elsevier, vol. 67(C).
    4. Zhang, Zeyi & Luo, Xuehua & Du, Jiating & Xu, Baoliang, 2024. "Substantive or strategic: Government R&D subsidies and green innovation," Finance Research Letters, Elsevier, vol. 67(PA).
    5. Liu, Guangqiang & Yang, Zhiqing & Zhang, Fan & Zhang, Nan, 2022. "Environmental tax reform and environmental investment: A quasi-natural experiment based on China's Environmental Protection Tax Law," Energy Economics, Elsevier, vol. 109(C).
    6. Hu, Jing & Zhong, Lejia & Qiao, Jingyuan, 2024. "Equity pledge and debt financing of listed companies," Finance Research Letters, Elsevier, vol. 59(C).
    7. Wang, Qiong & Qiu, Muqing & Tan, Wenhao, 2020. "Does insiders share pledging stifle innovation? Evidence from China," International Review of Financial Analysis, Elsevier, vol. 72(C).
    8. Sun, Yuan & Wen, YouYun & Jiang, Senyang & Zhang, Haoxiang, 2024. "The ripple effect of environmental shareholder activism and corporate green innovation: Evidence from Chinese listed companies," International Review of Financial Analysis, Elsevier, vol. 93(C).
    9. Xiaoran Huang & Weilong Kang, 2023. "Disagreement Motivated Trading: The Bright Side of Share Pledges," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 59(10), pages 3161-3200, August.
    10. Xu, Jingjing & Huang, Haijie, 2021. "Pay more or pay less? The impact of controlling shareholders' share pledging on firms' dividend payouts," Pacific-Basin Finance Journal, Elsevier, vol. 65(C).
    11. Zhou, Jingting & Li, Wanli & Yan, Ziqiao & Lyu, Huaili, 2021. "Controlling shareholder share pledging and stock price crash risk: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 77(C).
    12. Yang, Shengyi, 2023. "Carbon emission trading policy and firm's environmental investment," Finance Research Letters, Elsevier, vol. 54(C).
    13. Guangqian Ren & Yifan Mo & Li Liu & Minna Zheng & Liying Shen, 2022. "Equity pledge of controlling shareholders, property right structure and enterprise innovation efficiency: evidence from Chinese firms," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 35(1), pages 6558-6578, December.
    14. Jiang, Gaoyang & Peng, Jie & Liang, Xintong & Pan, Junyu, 2025. "Supply chain digitization and continuous green innovation: Evidence from China," Energy Economics, Elsevier, vol. 142(C).
    15. Roper, Stephen & Tapinos, Efstathios, 2016. "Taking risks in the face of uncertainty: An exploratory analysis of green innovation," Technological Forecasting and Social Change, Elsevier, vol. 112(C), pages 357-363.
    16. Li, Fan, 2025. "Pledge of controlling shareholder's equity, digital transformation, and green innovation," Finance Research Letters, Elsevier, vol. 76(C).
    17. Zhang, Yue & Ge, Mengshuai & Yang, Jiaju & Liu, Cuiying & Chen, Xi, 2023. "Controlling shareholders' equity pledge, digital finance, and corporate digital transformation," International Review of Financial Analysis, Elsevier, vol. 90(C).
    18. Tao, Qizhi & Xiang, Xueman & Yi, Biao, 2021. "Using stock split to secure pledged shares: Evidence from Chinese listed firms," International Review of Economics & Finance, Elsevier, vol. 74(C), pages 160-175.
    19. Rong Xu & Jialu Chang & Conggang Li & Wenlan Wang, 2019. "Research on the influence of equity pledge on stock price crash risk: based on financial shock of 2015 stock market crisis," Economic and Political Studies, Taylor & Francis Journals, vol. 7(4), pages 480-505, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guo, Qin & Zhao, Yuanping, 2025. "The influence mechanism of controlling shareholders' equity pledges on corporate risk-taking," Finance Research Letters, Elsevier, vol. 82(C).
    2. Yan, Guan & Liu, Zhidong, 2023. "Interconnectedness of financial institutions based on pledged shares in China," Finance Research Letters, Elsevier, vol. 57(C).
    3. He, Mingfeng & Huang, Dengshi & Hou, Xianping & Li, Yong, 2026. "The motivations and influencing factors of share pledging: An analysis of pledging and trading strategies," Research in International Business and Finance, Elsevier, vol. 84(C).
    4. Tian, Zhongliang & Tang, Ruoyuan & Liu, Wenhe & Qi, Yuan, 2024. "Controlling shareholder's equity pledge and corporate financialization," Finance Research Letters, Elsevier, vol. 60(C).
    5. Ren, Haibo & Xu, Yueping & Wu, Jiangning, 2024. "Controlling shareholders' stock pledges and stock price crash risks," Finance Research Letters, Elsevier, vol. 68(C).
    6. Song, Tao & Tian, Mohan & Li, Dongwei, 2025. "The development of digital finance, equity pledge behavior, and the quality of information disclosure," Finance Research Letters, Elsevier, vol. 86(PA).
    7. Jiang, Hui & Qian, Xiaolei & Ren, Daling & Peng, Cheng, 2024. "Tunneling motivation or legitimacy motivation? The impact of digital transformation on controlling shareholders' share pledging," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 1204-1224.
    8. Li, Shengnan & Zheng, Xinya & Niu, Jianbo & Ma, Xuan, 2024. "Share pledging of controlling shareholders and corporate social responsibility disclosure," Research in International Business and Finance, Elsevier, vol. 67(PA).
    9. Jingjing Jiang & Xiaofan Li & Yunqing Tao & Yongwei Ye, 2025. "Controlling Shareholder Share Pledging and Corporate Social Security Contributions in China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 65(4), pages 3501-3517, December.
    10. Ji, Tuo & Cai, Dong, 2024. "Major shareholder equity pledge and litigation risk," Finance Research Letters, Elsevier, vol. 65(C).
    11. Zuo, Yu & Bai, Tao, 2024. "Major shareholder equity pledges and the risk of stock price crash based on external audit quality," Finance Research Letters, Elsevier, vol. 63(C).
    12. Fengchao Li & Xing Zhang & Jaime Ortiz, 2021. "Linkages between share pledging, stock price risk and profitability: Evidence from the P.R. China," PLOS ONE, Public Library of Science, vol. 16(11), pages 1-20, November.
    13. He, Mingfeng & Huang, Dengshi & Zhou, Jianan, 2023. "The impacts of share pledging on firm investment timing and valuation," International Review of Financial Analysis, Elsevier, vol. 87(C).
    14. Guangcheng Ma & Qiyue Xiao & Xiaozhong Yang, 2024. "The impact of equity pledge on inefficient investment: a perspective from family entrepreneurship," International Entrepreneurship and Management Journal, Springer, vol. 20(2), pages 631-661, June.
    15. He, Chen & Zhang, Yinliang & Wang, Na, 2025. "Intellectual property financing and enterprise growth," Finance Research Letters, Elsevier, vol. 77(C).
    16. Zhang, Hao & Jin, Tian & Chen, Hanbin, 2023. "Do controlling shareholders collude with their related large shareholders? Evidence of equity pledges and shareholding increases from China," International Review of Financial Analysis, Elsevier, vol. 89(C).
    17. Jiang, Jin & Liu, Baolong & Ye, Rui, 2025. "Foreign institutional investors and share pledging: Evidence from China's stock market openness reform," Global Finance Journal, Elsevier, vol. 66(C).
    18. Junping Zhang & Ping Li, 2024. "Share pledging: Measuring margin call pressure and its influence on liquidity commonality," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(6), pages 3897-3914, September.
    19. Xin Wang & Yue Sun & Yanlin Li & Cuijiao Zhang, 2024. "Share pledge and accounting conservatism in share-pledging firms: Evidence from a natural experiment in China," PLOS ONE, Public Library of Science, vol. 19(7), pages 1-34, July.
    20. Feng, Yitian, 2023. "Do listed companies fulfill their public commitments? Evidence from the stake-raising commitments of Chinese companies," Pacific-Basin Finance Journal, Elsevier, vol. 77(C).

    More about this item

    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
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:88:y:2026:i:c:s1544612325024985. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.