The Impact of Analysts’ Attention on the Quantity and Quality of Enterprise Green Innovation: Evidence from Chinese Manufacturing Companies

Abstract

This study constructs fixed-effects models based on a sample of Chinese A-share manufacturing companies listed from 2012 to 2021, to examine the impact and mechanisms of financial analysts’ attention on the quantity and quality of enterprise green innovation (EGI). The study draws the following conclusions: (1) Analysts’ attention positively promotes the quantity and quality of EGI. (2) The relief of financing constraints from information-revealing effects mediates the relationship between analysts’ attention and EGI quantity, while the external monitoring effect improves corporate Environmental, Social, and Governance (ESG) performance and mediates the relationship between analysts’ attention and EGI quality. (3) The relief of financing constraints has a masking effect on the relationship between analysts’ attention and the improvement of EGI quality due to executives’ short-sightedness. But the external monitoring effect of analysts’ attention can have a curbing effect on this. (4) In the heterogeneity test, it is found that for better performing firms, analysts’ attention promotes the improvement of the EGI quality. However, for poorer performing firms, the effect is not significant as the performance pressure effect is more pronounced. This study emphasizes the significant impact of analysts’ attention on external monitoring of EGI quality compared to other research. The findings support the need for relevant policies to guide and strengthen the external monitoring effect of analysts’ attention in practice, as well as the development of differentiated environmental regulation policies for firms with different characteristics.