DOI: https://doi.org/10.36347/sjebm.2026.v13i10.002

Pages: 562-569

The paper empirically examines the impact of local government debt governance on corporate green innovation and its underlying mechanisms by using data on cities and A-shares listed on the Shanghai and Shenzhen stock exchanges from 2009 to 2024. The research shows that local government debt governance can enhance significantly corporate green innovation. The mechanisms tests indicate that local government debt governance promotes corporate green innovation by increasing the credit funds availability and the short-term financial assets allocation. Heterogeneity analysis reveals that the positive effect of local government debt governance on green innovation is more pronounced in state-owned enterprises, firms whose directors, supervisors, and senior management have a financial background, and firms without internal control deficiencies.