How to Incentivize Green Innovation: The Role of Executives Environmental Performance Evaluation in China

Our analysis begins with an initial sample of all A-share non-financial firms listed on the Shanghai and Shenzhen Stock Exchanges from 2007 to 2012. The sample period starts in 2007 to address comparability issues arising from China’s adoption of new accounting standards that year, which significantly altered financial reporting practices. We conclude the sample in 2012 to isolate the net effect of the Measures in 2010 by minimizing confounding factors from prolonged economic cycles, industry dynamics, and overlapping policy interventions .
Firms are categorized into three ownership types based on their ultimate controlling shareholders: central SOEs under the SASAC, local SOEs controlled by provincial or municipal governments, and non-SOEs comprising all other entities. Green innovation data are sourced from the Chinese Research Data Services (CNRDS), while financial and governance variables are obtained from the China Stock Market & Accounting Research database.
To ensure sample validity, we exclude (1) financial firms, (2) financially distressed firms labeled as ST or PT, (3) observations with leverage ratios exceeding 1, (4) firms with missing financial data, and (4) firms listed after 2010 or delisted before 2010 to maintain a balanced panel structure. The final dataset comprises 7,317 firm-year observations from 1,377 unique firms. All continuous variables are winsorized at the 1st and 99th percentiles to mitigate the influence of extreme values.