External audit quality and green innovation: Does environmental information disclosure matter?

Abstract

This study investigates the impact of external audit quality on green innovation. Utilizing comprehensive data of Chinese listed firms from 2008 to 2021, this study offers three key findings. First, we find that high-quality external audit increases green innovation. Second, this relation is significantly mediated and positively moderated by environmental information disclosure. Third, the positive effect is more pronounced in firms that have a high level of environmental information disclosure, are large-scale, are state-owned, or are green. This study identifies a reasonable policy approach to mitigate the dual externalities of corporate green innovation from the perspective of external governance. This approach is of significant theoretical and practical importance for heavy-polluting enterprises to enhance their environmental performance and contribute to green development.