Does Green Finance Policy Contribute to Corporate Green Innovation? Evidence From a Quasi‐Natural Experiment in China

ABSTRACT

This study examines the impact of the Green Finance Reform and Innovation Pilot Zones policy (GFP) on corporate green innovation (CGI). The results show that GFP significantly promotes CGI, including both substantive and strategic green innovation, with a larger effect on strategic green innovation. This effect is more pronounced in large firms, firms with environmentally conscious managers, non‐heavily polluting firms, and high‐tech firms. Mechanism analyzes show that green investment, agency costs, and green agency costs are important channels through which GFP promotes CGI. In addition, external market attention serves as an informal governance mechanism, significantly enhancing the policy impact, particularly for substantive green innovation. The findings provide useful policy implications for improving GFP and fostering CGI.