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Green innovation can assist firms in achieving corporate social responsibility legitimacy among their stakeholders. However, we have limited knowledge about how to encourage firms toward it. Using a sample of Chinese firms, we examine the effect of executive equity incentive plans (EEIPs) on green innovation. Our baseline results indicate that EEIPs promote firms' green innovation and the importance of green patents in their patent portfolio. This positive effect is mainly exists in restricted stocks, rather than stock options. After addressing potential endogeneity problems by adopting instrumental variable regression method, difference-in-differences method and an entropy-balanced sample research design, we find a causal effect of EEIPs on green innovation. This positive effect is pronounced in firms facing greater environmental risks. Further analysis suggests that green innovation helps in promoting the firm's environmental outcomes, without an adverse effect on performance.

Purpose This paper aims to investigate the impact of executives’ self-interested behaviors induced by the pay bandwagon on stock price crash risk in Chinese listed firms and attempt to shed light on the influencing channels of this effect. Design/methodology/approach The empirical analysis is based on the panel data set which contains information on the executives and stock price of 11,710 firm-year observations over the period 2007–2015. The multiple linear regression models are implemented to examine whether the executive pay bandwagon affects corporate future stock price crash risk. Then, earnings management, tax avoidance and overinvestment are applied as the behavior choice of executive pay bandwagon to analyze the potential influencing channels. Findings Results indicate that the lower the executives’ pay is than the median pay level of executives in firms of similar size and industry, incentives of pay bandwagon are stronger, leading to a higher future stock price crash risk. Moreover, evidence shows that the positive relationship between executive pay bandwagon and crash risk is attenuated when firms have strong external monitoring mechanisms such as Big Four auditors, cross-listing in the Hong Kong stock exchange, high marketization process and high institutional ownership. Then, some weak evidence supports that internal governance such as internal control plays the same moderating role. In addition, based on the path test, the stock price crash effect of the executive pay bandwagon has a complete tax avoidance intermediary effect and a partial earnings management intermediary effect. Originality/value This study contributes to the executive compensation literature from a psychological perspective on the economic consequences research brought about by the pay bandwagon for China’s listed firms. Moreover, this paper provides a supplement to the literature on factors which is completely different from previous studies that affect the future stock price crash risk.

This study investigates corporate innovation from the perspective of a firm’s employee-related corporate social responsibility (CSR) in China. We find that more employee-related CSR generates more innovation success. The results suggest that a firm’s incentive to offer better employee-related CSR is an important determinant of its innovation. The positive effect is more pronounced when employees’ input into innovation is more important, and when free-riding among employees is stronger. Additional tests indicate that more employee-related CSR spurs innovation through employee stability and innovation efficiency. Our results hold up to a variety of model specifications and endogeneity issues.