Navigating climate policy uncertainty: Impacts on continuous innovation in corporations

Shixian Ling, Hui Xia, Zhangxin (Frank) Liu, Sirimon Treepongkaruna, Samara Haroon

Research output: Contribution to journalArticlepeer-review

Abstract

We explore the impact of Climate Policy Uncertainty (CPU) on continuous innovation within enterprises amid the escalating challenges of climate change. By applying textual analysis to quantify CPU in China, our findings reveal a significant positive relationship between CPU and continuous innovation. CPU emerges as a significant driver of continuous innovation, which holds up against various robustness and endogeneity checks. Specifically, CPU fosters innovation by promoting greater international diversity on boards and reducing inefficient investments. Our paper highlights the strategic importance of embracing policy-induced uncertainty as an opportunity for advancing innovation and green transformation.

Original languageEnglish
Article number106436
Number of pages8
JournalFinance Research Letters
Volume71
DOIs
Publication statusPublished - Jan 2025

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