Who is financing corporate green innovation?

Green innovation is a major engine of economic growth in the new era. However, due to its high risk, long cycle and double externalities, green innovation often requires long-lasting financial support during its development. In the process of green innovation, do Chinese public listed companies show clear preferences in financing sources? What role does the "invisible hand" of the government play in the green-innovation-related financing activities of public listed companies? Drawing upon the data of green patent application and citation of A-share listed companies in Shanghai and Shenzhen between 2007 and 2014, this paper employed the Poisson model for panel data to perform an empirical study to confirm the aforementioned questions. The research indicates that public listed companies can acquire the funds needed for green innovation both through internal financing and external financing. The effect of the three external financing channels, namely government subsidies, equity financing and debt financing on green innovation are gradually weakened and this result is consistent with a variety of robustness checks. Meanwhile, government subsidy can encourage public listed companies to enhance their level of green innovation through debt financing and equity financing.