Green Innovation And Equity Financing Costs In Public Companies

The phrase "We need both green water and lush mountains,but also golden mountains and silver mountains" represents the central theme of the contradiction between economic development and environmental protection,which is inherent in the overarching theme of socialist construction.In the context of achieving a green transformation and pursuing a sustainable development path,green innovation has garnered increasing attention as a solution that generates economic development and environmental protection benefits simultaneously.Despite the government’s promulgation and implementation of numerous policies to promote the development of green innovation in China,the growth rate of green innovation has been somewhat inadequate in recent years.Therefore,while implementing corresponding incentives or constraints on enterprises externally,it is still essential to ensure that the goal of green innovation is compatible with the incentives of enterprises.Essentially,individual enterprises are the foundation of green innovation and growth.The challenge lies in how to inspire the internal driving force of green innovation in enterprises,motivate them to take certain risks,and actively engage in green innovation activities.Chinese companies urgently need to identify the returns and competitive advantages that green innovation brings.In recent years,scholars have gradually conducted research on the economic consequences of green innovation.However,most studies focus on foreign countries and are more concerned with the competitive advantages and corporate reputation that green innovation brings,with little research on the impact of green innovation on capital market performance.In this article,we selected the listed companies on the Shanghai and Shenzhen stock exchanges from 2011 to 2021 as samples to investigate the impact of green innovation on equity financing costs,where green innovation is measured by the number of green patent applications,and equity financing costs are calculated using the OJ model.The empirical results show that the quality improvement of green innovation significantly reduces the equity financing costs of enterprises,but the quantity of green innovation does not have a significant impact on equity financing costs.This article also explores the intermediary mechanism of environmental information disclosure and institutional investors’ attention,analyzing the moderating effects of market competition intensity and environmental regulation on the impact of green innovation on equity financing costs.The regression results show that:(1)Environmental information disclosure plays an intermediary role in the impact of green innovation on equity financing costs.(2)Institutional investors’ attention plays an intermediary role in the impact of green innovation on equity financing costs.(3)Market competition intensity has a positive moderating effect on the impact of green innovation on equity financing costs because the higher the market competition intensity,the more excess returns green innovation can bring.(4)Environmental regulation has a negative regulating effect on the impact of green innovation on the cost of equity financing.This is because in regions with high levels of environmental regulation,patent application quotas may lead to negative market interpretations and the "crowding out effect" of pollution control expenditures on research and development expenditures,which will reduce the overall quality of corporate green innovation.The following recommendations have been proposed through the research conducted in this article:(1)The government should support high-quality projects and raise subsidy evaluation standards to promote substantial innovation in companies.(2)The government should establish a sound system for disclosing environmental information and build a bridge between companies and the public for communication.(3)The government should guide the public to develop a green mindset,enabling consumers to consciously choose green products and investors to consciously pay attention to a company’s green innovation capabilities.This would help to channel funds into the field of green stock financing,thereby accelerating the construction of a green financial system.(4)The government should strengthen the publicity and training of companies,enhance the social responsibility awareness of monopolistic enterprises,and accelerate the transformation from being required to innovate to wanting to innovate.(5)In regions with stricter environmental regulations,the government should provide more special subsidies for green innovation based on the potential value of a company’s green innovation,to ensure adequate funding for green innovation.