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Green innovation plays an increasingly significant role in sustainable development. We use the data of Chinese listed firms from 2010 to 2019 to investigate the impact of investor sentiment on corporate green innovation. The result indicates that optimistic investor sentiment significantly promotes corporate green innovation. Mechanism analysis shows that the higher the financial constraints, institutional ownership ratio, and analyst coverage of a firm, the stronger the impact of investor sentiment on green innovation, indicating that optimistic investor sentiment promotes green innovation through external financing and managerial catering channels. In addition, the impact of investor sentiment on corporate green innovation is more pronounced for state-owned firms. The study sheds light on a novel determinant of corporate green innovation and offers policy recommendations to advance green innovation, environmental protection, and sustainable development.
Li et al. (Thu,) studied this question.