Climate Policy Uncertainty and Corporate Green Innovation Bubbles: Increasing or Suppressing?

Abstract This paper empirically examines this question using a sample of A-share listed companies from 2010 to 2023. Findings reveal that climate policy uncertainty significantly increases corporate green innovation bubbles, a conclusion that holds under a series of robustness and endogeneity tests. Heterogeneity tests reveal that climate policy uncertainty exerts more pronounced effects on manufacturing firms, high-tech enterprises, heavily polluting companies, noncompetitive firms, and businesses in China’s central and western regions. Mechanism tests show that climate policy uncertainty influences corporate green innovation bubbles through dual channels: disclosure levels and information verification costs. Its net effect depends on the dynamic equilibrium between policy volatility intensity and market development maturity. Further analysis indicates that climate policy uncertainty substantially amplifies corporate green innovation bubbles by suppressing substantive innovation while promoting strategic innovation. A microlevel transmission chain exists linking “policy volatility–innovation type–bubble evolution,” where asymmetric changes in these factors significantly intensify bubble severity. Economic consequence analysis reveals that increased corporate green innovation bubbles temporarily boost financial performance and reduce financing constraints, reflecting a mismatch between short-term market incentives and long-term risks.