Executives’ Political Influence, Green M&A and Green Innovation: Evidence from China’s Heavily Polluting Private Firms

Literature on green M&A (merger and acquisition) drivers is mainly from the perspective of conforming legitimacy, but studies based on a dual legitimacy perspective are still lacking.Our study introduces executives' political influence and investigates how it contributes to green M&A using the dual legitimacy theory.Using a dataset of 409 heavily polluting private firms between 2012 and 2020, we find the conformity and initiativeness of executives' political influence will drive heavily polluting firms to implement green M&A, proving its dual legitimacy.The above finding was tested under several robustness tests, such as Tobit regression and changing measurement methods, and the endogeneity test.Further, we find executives' political influence is more inclined to post-merger strategic green innovation with a low "green concentration", and this phenomenon has positive industry and spatial spillover effects, implying that it is mostly motivated by policy arbitrage rather than substantive upgrading.Finally, based on an external governance perspective, we find ESG rating and media supervision play a role in debiasing between executives' political influence and post-merger strategic green innovation.Our study contributes to the environmental governance function of executives' political influence, which gives significant theoretical significance and practical insights for the green transformation of heavily polluting private firms.