Government environmental governance and firms’ green innovation: Evidence from listed firms in heavy pollution industries of China

Based on the government work reports of 230 Chinese prefecture-level cities from 2007 to 2019, we create a new metric for government environmental governance by Python crawler technology. Using data from listed firms in heavy pollution industries, we find that government environmental governance significantly promotes firms’ green innovation, and the effect is a crowding-out of other innovation activities. Further analyses indicate that government environmental governance can enhance green innovation from both the end and source of the production and contributes significantly to both substantive and strategic green innovation. Meanwhile, the positive association is heterogenous by property rights and firm sizes.