Institutional openness and firm’s green innovation: evidence from a quasi-natural experiment in China

China’s Free Trade Zones (FTZs) policy represents a significant initiative that plays a crucial role in promoting green innovation and high-quality development among enterprises. With the panel data of China’s A-share listed companies from 2009 to 2019, this study employs a staggered difference-in-differences model to empirically examine the relationship between FTZs and corporate green innovation. Our findings indicate that the establishment of FTZs significantly enhances corporate green innovation. Specifically, FTZs promote green innovation through three channels: alleviating financial constraint, improving the quality of internal controls, and increasing R&D investment. Furthermore, the positive impact of FTZs establishment on green technological innovation is more pronounced in coastal FTZs firms, non-heavy polluting industries, and non-state-owned enterprises. Our conclusions remain robust after several tests for robustness.