Does green governance affect financing constraints? : evidence from China's heavily polluting enterprises

Given the increasing focus on global sustainable development, many enterprises in developing countries such as China participate in green governance and scale up their green investment; however, many enterprises still experience financing difficulties. Our study investigates whether green governance can mitigate corporate financing constraints. Using a sample of Chinese, A-share listed, high-pollution enterprises from 2013 to 2018, we find that corporate green governance practices, including environmental performance and information disclosure, ease corporate financing constraints. This effect is pronounced in areas with high levels of financial development and for state-owned enterprises. This paper not only proposes a channel for alleviating enterprises' financing constraints but also reveals the importance of industrial transformation and emissions reduction for energy-intensive industries in emerging markets.