Does economic policy uncertainty affect corporate green innovation? evidence from China

This study explores how firms adjust their green innovation (GI) activities as a business strategy in response to economic policy uncertainty (EPU). Using a data set of listed firms in China over the period 2007–2023, we find that firms increase their GI engagement during periods of increased EPU. We also find that the positive association between EPU and GI activities is more pronounced in firms with lower investor attention, when investor sentiment is optimistic, and in firms with higher reputation capital. Our analysis suggests that GI activities may help firms to alleviate the impact of increasing economic uncertainties. We also argue that the strategic role of GI deserves attention from managers, investors and policymakers alike.