Corporate Environmental Expenditure, Signaling Mechanism, and Green Innovation Behavior: Evidence from Chinese A-Share Listed Firms

The environmental protection expenditure of enterprises is an important investment in the process of developing green innovation. Although a large number of researchers have evaluated the factors promoting green innovation, few have studied the impact of environmental protection expenditure of enterprises on green innovation, and signal transmission is an important mechanism. This paper selects the data of China’s Shanghai and Shenzhen A-share listed companies from 2012 to 2023, obtains the data of enterprise environmental protection investment through a manual collection and keyword screening method, and analyzes the micro impact of enterprise environmental protection investment on green innovation output by using a two-way fixed corresponding method. The empirical results show that the environmental protection expenditure of enterprises will significantly promote green innovation. At the same time, the green innovation effect of enterprise environmental protection expenditure is also different due to enterprise scale, financing constraints, and life cycle. At the same time, this paper verifies the signal transmission mechanism of enterprises’ environmental protection expenditure, that is, enterprises’ investment in environmental protection which will release positive signals to the outside so as to strive for more social resources. Further empirical analysis verifies the promotion effect of enterprise environmental protection expenditure on performance. This paper asserts that enterprises should play a positive role in environmental protection investment, and government departments should increase support for enterprises.