Effect of Cross-Ownership on Firm Green Innovation

The phenomenon of companies in emerging capital markets establishing inter-firm network relationships through cross-ownership is becoming increasingly common, but the economic effects of this phenomenon are controversial. This study explores the impact and underlying mechanisms of cross-ownership on firm green innovation from the perspective of green development. The results reveal that cross-ownership can effectively enhance the level of corporate green innovation. The mechanism analysis reveals that cross-ownership promotes green innovation and thus reduces corporate credit risk. Environmental regulatory pressure exerts a significant positive moderating effect on cross-ownership and corporate green innovation. The path analysis reveals that cross-ownership mainly enhances the level of corporate green innovation by alleviating financing constraints and reducing agency conflicts. The role of cross-ownership in corporate green innovation has both a “governance effect” and “governance effects.” The heterogeneity analysis reveals that the promotion of corporate green innovation by cross-ownership is only significant in large-scale companies. The effect of cross-ownership on corporate green innovation is not substantively different across the nature of ownership and across industry portfolio attributes. This study provides guidance for enhancing the level of corporate green innovation and enriches the relevant research on the economic effects of cross-ownership.