Environmental Regulation and Corporate Green Innovation Bubbles: Evidence from China’s Green Shield Action

Firms’ strategic decisions concerning green innovation are shaped by environmental regulation. We investigate whether corporate green innovation bubbles are associated with the implementation of China’s Green Shield Action. Firms exposed to the policy exhibit fewer green innovation bubbles; this association is stronger when firms have more female executives or higher levels of executive green awareness. Increased public environmental concern and green investment may be potential channels. As an extension, the findings are also consistent with a reduction in debt maturity mismatch associated with the suppression of green innovation bubbles.