How does economic policy uncertainty affect corporate green innovation? Evidence from China

Macroeconomic policies profoundly affect companies’ behavior. Data on China’s Economic Policy Uncertainty (EPU) Index and A-share listed companies from 2007 to 2019 were selected to investigate the impact of EPU on corporate green innovation (GI). We find that (i) EPU promotes both substantive green innovation (SUGI) and strategic green innovation (STGI). (ii) Property rights, government subsidies (GSs), industry competition, and industry type have significant moderating effects on the promotion of GI. (iii) EPU promotes GI by forcing companies to increase R&D investment and R&D personnel. (iv) The impact of EPU on GI has a threshold effect of cash flow volatility (CFV). Our findings provide a reference for further guiding enterprises to GI during frequent economic policy changes.