Do institutional contingencies matter for green investment?-An institution based view of Chinese listed companies.

Current research in the field of environmental management has placed significant emphasis on understanding the reasons behind varying organizational responses to environmental responsibilities. Governance scholars emphasize the central role of institutional factors in shaping environmental responsibilities, primarily due to the substantial influence exerted by regulatory institutions. Drawing on institutional theory, we investigate how sub-national institutional factors impact a firm's green investment intensity and explore their moderating influence on the relationship between green investment and a firm's financial performance. Using a database of Chinese listed companies from 2012 to 2019, this study employs fixed effect model as a baseline regression. Our analysis demonstrates that sub-national institutions, such as state-owned enterprises (SOEs), regional development, and cross-listing, have significant and positive impact on corporate green investment. Our study further provide an evidence that green investment significantly improve firms' financial performance. Moreover, the positive effect of green investment on financial performance is stronger in SOEs and in firms of developed regions as compared to their counterparts, and weaker in cross listed firms than those of non-cross listed peers. Our study suggest that subnational institutions play an imperative role in improving environmental quality and financial performance by promoting corporate green investment. To make sure that our findings remain robust to endogeneity, we applied generalized method of moments (GMM) and propensity score matching (PSM) method. Our findings further provide implications for emerging economies with similar shareholding patterns and unbalanced regional development.