Miracle Drug or Quack Remedy? Unpacking the Effect of Central Environmental Protection Inspection on Green Innovation.

As an innovative regulation of environmental governance, the role of environmental protection inspection in green innovation has received limited attention. This paper adopted DID (difference-in-difference) model to address the effect of central environmental protection inspection (CEPI) and explored why and how the CEPI affects corporate green innovation. We further investigated the moderating roles of firm size and firm age as organisation-level factors. With a sample of China's listed companies from 2014 to 2019, the empirical results show that the CEPI is significantly and positively associated with green innovation and that both firm size and firm age strengthen the positive effect of the CEPI on green innovation. We conducted PSM (propensity score matching) model to mitigate the endogenous problem and found our results are robust. This paper contributes to the literature about the CEPI and green innovation, and sheds light on environment policy enactment for the government. [ABSTRACT FROM AUTHOR]