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Does Local Government Debt Inhibit Corporate Green Innovation? Evidence From Listed Chinese Companies

In: Proceedings of the 2025 10th International Conference on Financial Innovation and Economic Development (ICFIED 2025)

Author

Listed:
  • Can Cui

    (Shandong Normal University, Business School)

  • Dong Xiang

    (Shandong Normal University, Business School)

Abstract

In recent years, green development and increasing local government debt have become hot topics in China. Therefore, it is significant to study the impact of this debt on corporate sustainability, as in doing so, it is possible to explore the micro-consequences for corporations. In this study, we selected annual data from listed companies from 2007 to 2022 as the sample and empirically analyzed the influence of local government debt on corporate green innovation and the mechanisms involved. The empirical results show that local government debt exacerbates corporate financing constraints, thereby adversely affecting corporate green innovation. A further analysis showed that local government debt has a more significant adverse effect on firms with relatively concentrated shareholdings, firms with fewer independent directors, and firms in heavy-pollution industries. The findings of this paper provide some theoretical references and principles for local government debt management and government support for green innovation.

Suggested Citation

  • Can Cui & Dong Xiang, 2025. "Does Local Government Debt Inhibit Corporate Green Innovation? Evidence From Listed Chinese Companies," Advances in Economics, Business and Management Research, in: Maizaitulaidawati Md Husin & Tomoki Fujii & Xiaodong Lai & Azlina Binti Md Yassin (ed.), Proceedings of the 2025 10th International Conference on Financial Innovation and Economic Development (ICFIED 2025), pages 53-60, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-702-1_6
    DOI: 10.2991/978-94-6463-702-1_6
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