The Power of the Imperial Envoy: The Impact of Central Government Onsite Environmental Supervision Policy on Corporate Green Innovation

Focusing on a new policy which features onsite environmental monitoring conducted by central government, we investigate the impact of the National Environmental Protection Supervision (NEPS) policy on Chinese listed firms' substantive versus symbolic green innovation. The results indicate that substantive green innovations are significantly promoted after the NEPS implementation, while the effect for symbolic ones is not observed. Moreover, the positive impact on substantive green innovation is stronger for firms with low financial constraints and those located in developed regions. Our findings highlight the effectiveness of the process-monitoring environmental policy, providing practical references for environmental policymaking and corporate sustainable development.