Environmental regulation and green innovation: The moderating roles of green finance and executive green perception

Abstract

Amid escalating global climate pressures and environmental degradation, the pursuit of sustainable development has intensified scholarly interest in the link between environmental regulation and green technological innovation. This study offers a comprehensive examination of how environmental regulation shapes green technological innovation, with specific emphasis on the moderating effects of green finance and executive green perception. Using a double fixed-effects model and panel data from Chinese A-share listed companies from 2010 to 2023, we find that environmental regulation significantly promotes green technological innovation. Baseline regressions show that a one-unit increase in regulatory stringency corresponds to an approximately 27.4% increase in green patent output. Green finance operates as an important catalyst by reducing the risks and costs inherent in green R&D, while executive green perception aligns corporate decision-making with sustainable innovation objectives. Heterogeneity analyses reveal that regulatory impacts vary substantially across industries, regions, and firm life-cycle stages, underscoring the need for differentiated policy design. Key transmission channels—including the easing of financial constraints and the enhancement of corporate environmental, social, and governance (ESG) performance—further support green innovation indirectly. These findings provide actionable insights for optimizing environmental regulation, strengthening green finance, and enhancing executive green perception to advance sustainable development and accelerate the transition to a green economy.