Financial performance feedback, institutional ownership and green innovation: evidence from China

Abstract

Purpose The purpose of this study is to examine whether and how financial performance feedback influences green innovation performance by drawing on the behavioral theory of the firm (BTOF) and relying on motivation-based logic. Design/methodology/approach A total of 17,558 firm-year observations from 3,062 publicly traded firms in China are used as the research sample. Findings The results reveal that low-performing firms are less likely to conduct green innovation activities because managers burden pressure to meet short-term targets. This study further finds that these relations are moderated by institutional ownership. Originality/value This study contributes to the BTOF literature by linking performance feedback to green innovation activities. This study applies a motivation-based logic to relate performance below and above aspirations to green innovation activities. This study introduces institutional ownership as a boundary condition.