Can non-mandatory governance mechanism promote corporate green innovation—— Evidence from Internal Audit

Can non-mandatory governance mechanism promote corporate green innovation—— Evidence from Internal Audit | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Article Can non-mandatory governance mechanism promote corporate green innovation—— Evidence from Internal Audit Guochao Liu, Yufei Zhao, Jianluan Guo This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-5908865/v1 This work is licensed under a CC BY 4.0 License Status: Under Review Version 1 posted 12 You are reading this latest preprint version Abstract Green innovation is a key strategy for enterprises to achieve sustainable development and is essential for countries to achieve high-quality economic growth. Green innovation is influenced by the corporate governance mechanism. Internal audit, as a non-mandatory system, plays a critical role in improving corporate governance, and, as a result, is crucial for enhancing corporate green innovation. This study collects and analyses data on internal auditing practices from Chinese listed companies between 2007 and 2022 to examine how internal auditing influence corporate green innovation. The results show that: ( 1 ) Internal auditing significantly enhances green innovation, with findings remaining robust after various robustness and endogeneity tests. ( 2 ) Mechanism analysis reveals that internal audits promote corporate green innovation by improving executive awareness of environmental issues, increasing firms' risk tolerance, and reducing financialization, through a process of strategy implementation of “strategic choice and decision—risk assessment—resource allocation”. ( 3 ) Heterogeneity analysis shows that internal audits have a stronger impact on green innovation in firms with high internal control quality, non-state-owned enterprises, large-scale firms, and those with greater analyst attention. This study contributes to the theoretical understanding of the role of internal auditing in green innovation and provides insights for Chinese regulators to assess, guide, and improve internal audit practices in promoting sustainability. Business and commerce/Business and management Business and commerce/Economics Internal Auditing Corporate Green Innovation Executive Green Awareness Corporate Risk Tolerance Corporate Financialization 1. Introduction With the rapid development of the global economy, enterprises across countries are facing numerous challenges arising from environmental changes, such as excessive resource consumption, pollution, and environmental degradation. Consequently, the pursuit of sustainable development strategies that enable a “harmonious coexistence” between corporate growth and the environment has become a global issue. Currently, the widely recognized view, supported by governments, consumers, and other stakeholders, is that green innovation is a key strategy for achieving corporate sustainability (Huang and Li, 2017). Green innovation, through the adoption of new technologies and methods, not only reduces pollutant emissions and improves pollution control efficiency, but also enhances resource utilization, lowers production costs, and drives sustainable economic development (Magat, 1978). It is an essential tool for achieving both environmental protection and technological advancement and serves as a crucial means for firms to gain competitive advantages and adapt to increasingly stringent environmental regulations. China’s early development model, which prioritized economic growth at the expense of the environment, has hindered comprehensive societal health (Wang et al., 2023). Currently, China's overall level of green innovation remains relatively low, with significant regional disparities (Li and Li, 2024). Therefore, understanding how to enhance the green innovation capabilities of Chinese firms is not only pivotal for China's transition to high-quality development, but also offers valuable insights for other countries struggling with green innovation. This research also responds to an urgent demand for academic investigation into this area. Previous studies indicate that corporate green innovation typically follows the logic of “external pressure → green behavior → corporate performance,” influenced by both external factors such as institutional and market environment, and internal factors including corporate governance and executive characteristics. External drivers include environmental regulations (Hu et al., 2022) and government subsidies (Han et al., 2024), while internal factors are often examined through the lens of agency theory, highlighting the importance of internal governance in enhancing green innovation (Cuerva et al., 2014). Green innovation is characterized by significant financial requirements, long cycles, and high uncertainty, as well as unique knowledge and environmental cost spillovers. As such, firms may face challenges in achieving cost compensation through green innovation and are more susceptible to financing difficulties and agency conflicts (Polzin, 2017). Research has primarily explored the influence of factors such as internal controls (Ma et al., 2022), corporate social responsibility disclosures (Xu et al., 2022), executive environmental awareness (Zhao et al., 2022), and board diversity (Nadeem et al., 2020; Lin et al., 2024) on green technological innovation from an internal organizational perspective. Most studies focus on the impact of mandatory policy measures on green innovation, while research on non-mandatory regulations is relatively scarce. As a non-mandatory mechanism that enhances corporate governance, internal audit relies more on self-regulation and social responsibility awareness. It allows organizations to flexibly promote resource allocation according to their resource conditions and technological capabilities, while mitigating agency conflicts and information asymmetry. Therefore, exploring whether internal audit can strengthen corporate responsibility for green innovation, enhance environmental awareness, alleviate agency conflicts, and thus promote corporate green innovation, holds profound significance. While existing research suggests that internal controls, as part of internal governance mechanisms, can enhance firm value (Wang et al., 2022), internal auditing offers distinct advantages. Compared to internal controls, internal auditing normalizes auditing and supervision mechanisms and, as an internal functional department, possesses a clear information advantage. Through the collection and analysis of internal information and effective communication with various business departments, internal auditing can monitor the overall business status, identify weaknesses in internal controls, and assess risk factors. By directly feeding back this information to senior management via internal reports, internal auditing plays a key supervisory role as the “third line of defense,” ensuring that both the subject and operation process of authority are effectively monitored and improving the quality of financial reporting (Abbott, 2016). This, in turn, provides institutional support for green innovation. Furthermore, this study focuses on China for several key reasons. Firstly, as the world’s second-largest economy, China’s capital markets are maturing, and the gradual strengthening of internal auditing practices in recent years provides a dynamic environment to study its influence on corporate behavior. Secondly, China’s corporate structure exhibits significant differences in ownership types, with state-owned and private enterprises differing notably in governance structures and market competition, offering a unique perspective on the heterogeneous effects of internal auditing. Additionally, as a developing country with a heavy industrial base and numerous high-pollution firms, the role of internal auditing in promoting green governance is particularly important in these sectors. Studying China will not only help analyze the mechanisms through which internal auditing affects firms of different types but also shed light on its role in promoting green innovation, offering valuable insights for other developing countries facing similar challenges. Thus, this study empirically analyzes the impact of internal auditing on corporate green innovation using data from Chinese A-share listed companies between 2007 and 2022. The findings reveal that: ( 1 ) Internal auditing significantly enhances green innovation, with results remaining robust after a series of tests for robustness and endogeneity. ( 2 ) Mechanism analysis indicates that internal auditing promotes green innovation by guiding executive awareness of environmental issues, improving risk tolerance, and reducing financialization to provide resource support, through the entire strategic implementation process—spanning “strategic choice and decision-making, risk assessment, and resource allocation.” ( 3 ) Heterogeneity analysis shows that factors such as internal control quality, non-state ownership type, firm size, and analyst attention strengthen the positive relationship between internal auditing and green innovation. This study makes both theoretical and practical contributions. Theoretically, it clarifies the mechanisms through which internal auditing affects green innovation. By integrating corporate governance and environmental management theories, this study shows that internal auditing fosters green innovation through three main paths: enhancing executive green awareness, increasing risk tolerance, and reducing financialization. It also provides comparative analysis of the governance effects of internal auditing at four levels: internal control, ownership type, firm size, and analyst attention. This enriches the literature on internal auditing’s governance role. Secondly, from the perspective of corporate governance, this research deepens our understanding of the internal drivers of green innovation. While previous literature has largely focused on board governance and ownership structure, the role of internal auditing has been underexplored, and this study addresses that gap. Practically, this study highlights the importance of internal auditing in monitoring and promoting green innovation practices. First, it provides valuable insights for firms to improve their internal auditing systems, as internal auditing plays a crucial role in mitigating agency problems and fostering innovation and sustainability. Companies should strengthen their commitment to internal auditing, improve its independence and authority, and enhance its role in corporate governance. Second, this research informs strategies for enhancing green innovation, emphasizing the need for firms to guide executives in improving their environmental awareness, risk management capabilities, and reducing financialization to foster sustainable development. The remainder of this paper is structured as follows: Section 2 presents the literature review and hypothesis development; Section 3 outlines the research design; Section 4 discusses the empirical results, endogeneity tests and mechanism analysis; Section 5 presents a heterogeneity analysis; and Section 6 concludes with policy implications and recommendations. 2. Literature review and theoretical hypothesis 2.1 Research on economic consequences of internal audit Internal auditing is widely regarded as a critical tool for corporate governance and operational effectiveness (IIA, 2010). Initially, the role of internal auditing focused primarily on compliance assurance, financial control, and asset protection (Allegrini et al., 2006; Dellai et al., 2016). However, over time, it has evolved through three historical stages—supervision, control, and service. Today, the function of internal auditing emphasizes its role in creating value for organizations (Erasmus & Coetzee, 2018). Internal auditing can enhance corporate governance by effectively supervising managerial behavior (Prawitt et al., 2009), improving the quality of financial information (Jaggi, 2023; Renschler et al., 2023; Calvin & Holt, 2023), while also reducing information asymmetry (Narayanaswamy et al., 2019). These improvements, in turn, lead to a range of positive governance outcomes. Existing research has shown that internal auditing can help curb earnings management (Ege et al., 2022), reduce internal control deficiencies (Lin et al., 2011), and prevent corporate misconduct (Ege, 2015; Brink et al., 2022), as well as lower overall risk levels (Carcello et al., 2020) and enhance profitability (Liu, 2021). Moreover, compared to external auditing, studies indicate that internal auditing plays a key role in enhancing external auditors' trust in their functions (Čular et al., 2020). This increased trust not only fosters collaborative synergies within the audit process but also significantly reduces the costs associated with external auditing (Al-Dhamari, 2018; Felix et al., 2001; Abbott et al., 2012). Strengthening internal auditing further contributes to improving the efficiency and timeliness of external audits, ultimately optimizing the overall audit process (Pizzini et al., 2015). 2.2 Research on the influencing factors of corporate green innovation Current research on corporate green innovation primarily focuses on identifying its influencing factors, which can be broadly categorized into external and internal drivers. In terms of external drivers, key factors influencing the development of green innovation include government environmental subsidies (Han et al., 2024), the intensity of environmental regulations (Ying & Jin, 2024), environmental tax incentives (Wang et al., 2022), media attention, and market competition (Bai et al., 2023). Additionally, the advancement of green finance reforms (Jia et al., 2023) and the increasing level of digitalization within firms (Gao et al., 2023) have also contributed to promoting corporate green innovation. On the internal side, various governance mechanisms within firms play a pivotal role in shaping strategic decisions and practices related to green innovation. For example, the governance quality of boards of directors (Wang et al., 2024) and board diversity, particularly in terms of gender composition (Lin et al., 2024), have been shown to significantly enhance both the quantity and quality of green innovation. Furthermore, the reform of ownership structures through mixed-ownership models (Yuan & Li, 2023) and the introduction of strategic investors (Yang et al., 2023) have been identified as key channels for promoting green innovation in state-owned enterprises. Moreover, effective internal controls that alleviate financing constraints and promote environmental investment are critical drivers of green innovation (Ma et al., 2022). A firm’s internal governance not only determines its investments and resource allocation in green technology research and development but also influences the effectiveness of green innovation implementation through the external market and policy environments. Specifically, governance structures related to Environmental, Social, and Governance (ESG) practices and Corporate Social Responsibility (CSR) directly impact a firm’s capacity for green innovation (Wang et al., 2023). As a result, the relationship between corporate governance and green innovation has become a key focus of contemporary academic research. 2.3 Literature commentary The academic literature on the influencing factors of corporate green innovation and the economic consequences of internal auditing has yielded substantial insights, which provide valuable reference points for our study. However, it is evident that, despite the growing emphasis on audit supervision, few studies have focused on internal auditing as an entry point to examine its impact on corporate green innovation performance and its underlying mechanisms. While existing research has demonstrated that internal controls can also enhance green innovation (Wang et al., 2022), internal auditing possesses two distinct functions—assurance and advisory—that make it more conducive to improving the efficiency of green innovation. On the one hand, internal audit departments, with their specialized personnel and ability to execute multiple projects and provide effective feedback, are positioned to enhance the independence and authority of the audit process. This facilitates managerial oversight and helps alleviate agency problems (Prawitt et al., 2009), thereby promoting corporate green innovation. On the other hand, the advisory role of the audit committee, leveraging its professional expertise, can further contribute to the optimal allocation of firm resources, thereby providing crucial support for green innovation. Therefore, this study aims to explore the "black box" of the mechanisms linking internal auditing to green innovation from both a theoretical and empirical perspective. By doing so, we seek to provide insights for optimizing internal auditing practices, enhancing corporate governance, and improving environmental management, with the goal of offering policy recommendations to foster the development of corporate green innovation. 2.4 Theoretical hypothesis 2.4.1 Internal auditing and corporate green innovation Firstly, based on agency theory, high-quality internal auditing enhances the reliability of both financial and non-financial information by effectively supervising managerial behavior (Christopher, 2023). It increases the transparency of financial information, curtails opportunistic behaviors by management, and reduces the level of earnings management (Ege et al., 2022). Furthermore, by mitigating the tendency of management to prioritize short-term profits over long-term investments, internal auditing encourages management to actively pursue high-risk and long-cycle green innovation projects. Secondly, within the fiduciary relationship between shareholders, the board of directors, and senior management, internal auditing plays an assurance role by conveying the true operational status of the firm to the governance bodies. This reduces information asymmetry between management and governance (Lin et al., 2011) and helps alleviate agency conflicts. As a result, original shareholders are more willing to increase investments, thereby raising internal financing and easing financing constraints. This, in turn, incentivizes firms to allocate more resources to innovation. Moreover, internal auditing can oversee the rational allocation of corporate resources, mitigating conflicts among internal stakeholders and promoting coordination between departments. This enhances the overall efficiency of green innovation. Based on the above analysis, we propose the following hypothesis: H1: Internal auditing promotes corporate green innovation; that is, the higher the level of internal auditing, the stronger the firm’s capacity for green innovation. Internal auditing serves as a supervisory mechanism within corporate governance, while green innovation is a strategic tool for firms pursuing sustainable development. To explore how governance mechanisms drive strategic development, we find that the role of internal auditing in promoting green innovation can be further examined through the strategic implementation process, which can be conceptualized as the flow from “strategic choice and decision-making—risk assessment and assumption—resource allocation and execution.” Firstly, during the process of strategic choice, the green awareness of senior management plays a leading role. As the management’s green consciousness is awakened, green innovation is viewed as the firm’s future development direction and a strategic priority, thus being integrated into the strategic framework. Secondly, when assessing strategic initiatives, both the risks and returns must be considered, weighing short-term financial risks against long-term strategic benefits. Green innovation often involves substantial investments, high levels of technological research and development, and market uncertainties. Firms that are willing to undertake high levels of risk are more likely to embrace these green innovation-related risks, gradually launching green projects, advancing technological R&D, and innovating products to foster technological and market transformation. Finally, during the transformation process, resources must be allocated and executed effectively. Green innovation typically requires large-scale, long-term investments, rather than focusing solely on short-term profits through financialization. To support green innovation, firms need to curb financialization, increase resource allocation for green investments, and ensure adequate resource support for green innovation initiatives. In sum, these three mechanisms are interconnected and mutually reinforcing. Together, they function through the corporate governance structure to balance their interactions and ensure the sustainability of green strategies. Next, we will explore the specific pathways through which these three mechanisms operate between internal auditing and green innovation. 2.4.2 Mechanism of executive green awareness Firstly, internal auditing can promote corporate green innovation by enhancing risk identification and supervisory constraints, which in turn encourage senior management to raise their green awareness. According to strategic choice theory, senior management is a key decision-maker in the strategic direction of a firm (Child, 1997). Green innovation requires significant resource investment and involves high market risks. Only when top management incorporates green innovation into the firm’s responsibilities will they allocate resources and elevate it to a strategic priority. Senior management’s green awareness is defined as their understanding of environmental and resource issues, which shapes their knowledge and perception of the resource environment. This includes factors such as the recognition of green competitive advantages, social responsibility awareness, and perceptions of external pressures (Chan et al., 2016). The stronger the green awareness of senior management, the greater their sense of responsibility to drive green innovation. As a result, they are more likely to allocate resources and capabilities to the field of green innovation, thereby promoting its development within the firm. High-quality internal auditing can play a dual role in this process. On the one hand, it enhances the firm’s ability to identify and monitor environmental risks (DeSimone & Popoff, 2000), communicates environmental demands to senior management, and strengthens their green awareness. This enables the identification of potential benefits and market opportunities related to green innovation, and, in conjunction with the firm’s competitive advantages, helps determine the strategic direction. On the other hand, internal auditing functions as a supervisory and constraint mechanism, ensuring that senior management remains focused on the firm’s environmental responsibilities. It helps curb self-interested behaviors, shift managerial paradigms, and establish a management model centered on green manufacturing, green production, and green empowerment, thus cultivating a strong green image (Lin et al., 2013) and safeguarding the collective interests of stakeholders. Additionally, by providing high-quality environmental information disclosures and green data reports, internal auditing reduces information asymmetry, increases transparency, and further propels the development of green innovation. Based on the above reasoning, we propose the following hypothesis: H2: Internal auditing promotes corporate green innovation by enhancing senior management’s green awareness. 2.4.3 Mechanism of corporate risk tolerance Secondly, internal auditing promotes green innovation by improving the quality of financial disclosures (Jaggi, 2023), reducing the negative consequences of information asymmetry (Narayanaswamy et al., 2019), and encouraging firms to increase their risk tolerance, thereby fostering green innovation. Risk tolerance reflects a firm's willingness and inclination to incur costs in pursuit of high profits (Boubakri et al., 2013), representing the overall risk preferences and decision-making attitudes of corporate leaders. Compared to traditional innovation activities, green innovation is characterized by longer R&D cycles, higher resource requirements, and greater uncertainty, which results in a more substantial need for capital and a stronger reliance on external financing. Therefore, firms need to exhibit a higher level of risk tolerance in their investment decisions (Bargeron et al., 2010). According to risk management theory, managers typically tend to avoid risks for personal interests, opting to forego projects with positive net present values but higher risks that may result in performance uncertainty. This leads to short-termism in management decisions and the potential rejection of projects that could benefit the firm in the long run. However, shareholders, guided by the goal of long-term value maximization, may favour projects that support the firm’s future sustainable development, thus creating agency conflicts. High-quality internal auditing helps mitigate these conflicts by improving the quality of financial information (Jaggi, 2023), reducing information asymmetry, and alleviating agency problems between shareholders and management. Shareholders can leverage audited financial data to enhance their oversight of management, effectively curbing self-interested motivations and earnings manipulation (Brink et al., 2022), while reducing moral hazard. This process encourages management to adopt a higher level of risk tolerance. Furthermore, management can use the insights gained from high-quality internal auditing to better identify and manage risks and balance risks and rewards in decision-making. Managers are more likely to select higher-risk projects that advance green technological innovation, thereby promoting the firm’s long-term sustainable development. Based on this reasoning, we propose the following hypothesis: H3: Internal auditing promotes corporate green innovation by enhancing the firm’s risk tolerance. 2.4.4 Mechanism of corporate financialization Finally, internal auditing can promote green innovation by curbing corporate financialization. Financialization tends to enhance a firm’s short-term economic performance, whereas green technological innovation aligns more with long-term strategic goals. However, according to resource dependence theory, due to resource constraints, there is a competing resource allocation issue between financialization and green technological innovation. Excessive financialization increases a firm’s dependence on financial channels for profit, creating a "crowding-out effect" that diverts limited resources into financial assets. This reduces sustained investments in innovation, dampens technological innovation and undermines the firm’s ability to cultivate an environment conducive to innovation, thus restricting the development of its green innovation capabilities (Orhangazi, 2008). As a core supervisory tool in corporate governance, internal auditing can, to some extent, mitigate agency conflicts and reduce executives' incentives for "investment arbitrage" (Brink et al., 2022). By deterring self-serving and opportunistic behavior, internal auditing redirects management’s focus back to the firm’s core operations, reducing reliance on the returns from financial investments and increasing resource allocation toward green investments. This, in turn, fosters the continued development of the firm’s green innovation efforts. Based on this analysis, we propose the following hypothesis: H4: Internal auditing promotes corporate green innovation by curbing financialization. 3. Research design 3.1 Sample and data Since China achieved international convergence of accounting standards in 2007, this study selects Chinese A-share listed companies on the Shanghai and Shenzhen stock exchanges from 2007 to 2022 as the research sample. Data on internal audit quality were manually collected from corporate annual reports, internal control evaluation reports, and internal audit policies. Green innovation data were obtained from the Chinese Research Data Services Platform (CNRDS), while additional sample data were sourced from the China Stock Market and Accounting Research (CSMAR) database. The following samples were excluded: ( 1 ) financial firms, due to their distinct asset structures and business models; ( 2 ) companies with trading statuses marked as ST, *ST, or PT, given the heterogeneity of their financial conditions; and ( 3 ) firms with incomplete data. To mitigate the influence of outliers, all continuous variables were winsorized at the 1% and 99% levels. This process yielded a final sample of 17,303 valid observations. 3.2 Variables 3.2.1 Explained variable This study follows the approach of Zhang et al. (2019) and uses the natural logarithm of the total number of practical green patent applications after adding 1 filed by the firm each year (LnGreen) as a proxy for corporate green innovation. The patent application data for invention and practical patents of listed companies are obtained from the China National Research Data Service Platform (CNRDS). Based on the green patent list of the World Intellectual Property Organization (WIPO) and matching the corresponding International Patent Classification (IPC) numbers, we identify and count the number of green patent applications filed by firms each year. For robustness checks, this study uses the natural logarithm of the total number of invention and practical green patents after adding 1 filed by the firm each year (LnGI) as an alternative variable. This allows for a comprehensive examination of the impact of internal auditing on different types of green innovation performance. 3.2.2 Interpreted variable According to the International Professional Practices Framework (IPPF), the standards for internal audit quality are primarily divided into three categories: Attribute Standards, Performance Standards, and Implementation Standards. The Attribute Standards focus on independence and competence, while the Performance and Implementation Standards pertain to specific aspects of audit quality control, including audit planning, audit scope, audit evidence, audit methodologies, and audit reporting. Building on the studies of Liu et al. (2024), Ismael and Kamel (2021), and Wei and Yuan (2014), this study uses a composite measurement of Internal Audit Quality (IAQ). This composite measure (on a 4-point scale) captures four distinct IAQ characteristics, each assigned 1 point: IAModel: This measures the affiliation model of the internal audit department, reflecting its independence. When the internal audit department reports to both the board and management, the supervisory board, or the audit committee, IAModel is assigned a value of 1. If the internal audit department reports to management or the finance department, it is assigned a value of 0. The higher the level of the internal audit's affiliation within the organization, the stronger its independence, which allows the department to exercise its functions with greater authority and resources (Prawitt et al., 2009). IADuty: This measures the competence of the internal audit department, reflecting the scope of its responsibilities. The internal audit's duties are categorized into three types: special audits, financial audits, and internal control evaluation and consulting. Each responsibility type is assigned a value of 1, and the total is divided by 3 to compute the IADuty score. The broader the scope of responsibilities, the more support and competence the internal audit department demonstrates, as the department is expected to receive managerial backing to function effectively (Al-Twaijry et al., 2003). Dual: This refers to whether the roles of Chairman and CEO are held by the same person, reflecting performance standards. The separation of powers between the chairman and the CEO is essential for effective internal auditing. When the roles are separate, Dual is assigned a value of 1; when combined, it is assigned a value of 0. Combining these roles leads to excessive centralization of power, which could hinder the board’s functions and, consequently, impair the effectiveness of the internal audit. Big10: This refers to whether the company is audited by one of China’s top 10 audit firms, reflecting implementation standards. Internal and external audits complement each other (Knechel, 2007). High-quality external audits often correlate with more rigorous internal audit standards. Companies aiming for excellent corporate governance tend to hire top-tier external auditors, thereby setting a higher benchmark for their internal auditing systems (Goodwin-Stewart & Kent, 2006). If the company is audited by a Big 10 firm, Big10 is assigned a value of 1; otherwise, it is assigned 0. Internal audit quality (IAQ) is calculated using the summation approach outlined in Model ( 1 ), where higher IAQ values indicate superior internal audit quality. Samples with missing data were excluded from the analysis. $$\:{IAQ}_{i,t}={IAModel}_{i,t}+{IADuty}_{i,t}+{Dual}_{i,t}+{Big10}_{i,t}$$ 1 3.2.3 Control variables In terms of control variables, this study draws on the research of Ege et al. (2020) and Zhang et al. (2020), and controls for several factors at the company, governance, and market levels. At the company level, the study controls for company size (Size), years since listing (ListAge), profitability (ROA), growth (Growth), and board characteristics (Board). At the governance level, it controls for ownership balance (Balance) and ownership concentration (Top10). At the market level, it controls for Tobin’s Q (TobinQ). Additionally, the study includes controls for year effects (YEAR) and industry effects (IND). The variable definitions are provided in Table 1 . Table 1 —Variable definitions Type Variable Description Explained variable LnGreen Natural logarithm of the total number of practical green patent applications after adding 1 Interpreted variable IAQ Level of internal auditing, calculated with reference to Liu et al.(2024), Ismael and Kamel (2021), Wei and Yuan (2014) Control variables Size Firm size, calculated as ln (Total assets) Growth Change in operating income for the current period/operating income for the previous period ROA Return on assets, calculated as Net profit / Total assets Board Board size, calculated as ln(Number of directors) TobinQ Total market value/replacement cost of assets Top10 The sum of the shareholding ratio of the top 10 shareholders Balance The second largest shareholder's shareholding ratio / the largest shareholder's shareholding ratio ListAge Ln (Current year-listed year + 1) Year Year dummy variables Ind Industry dummy variables 3.3 Model specification To examine the impact of internal auditing on corporate green innovation performance, the following model was developed based on the following considerations: First, the Ordinary Least Squares (OLS) model imposes relatively few restrictions, making it effective in establishing the relationship between explanatory and dependent variables. Second, key factors influencing corporate green innovation, as identified in prior literature, were incorporated into the model to minimize confounding effects and enhance result robustness. Third, the model controls for year and industry fixed effects to account for characteristics that remain constant over time or across industries, thus mitigating potential biases. The specific model is as follows: $$\:\:\:{LnGreen}_{i,t}={{\alpha\:}}_{0}+{{\alpha\:}}_{1}{IAQ}_{\text{i},\text{t}}+\sum\:{Control}_{i,t}+{{\alpha\:}}_{2}\text{Y}\text{E}\text{A}\text{R}+{{\alpha\:}}_{3}\text{I}\text{N}\text{D}+{{\epsilon\:}}_{i,t}$$ 2 Among them, LnGreen is the proxy variable of green innovation, IAQ measures the internal auditing level of listed companies, ∑Control represents the control variable, YEAR and IND are year fixed effects and industry fixed effects. To prevent heteroscedasticity and sequence correlation problems in the process of OLS regression from affecting the conclusion, the standard errors of regression coefficients in this paper all use P-values. 4. Empirical results 4.1 Descriptive statistics Table 2 shows the descriptive statistical results of the main variables. First, the minimum value of the explained variable LnGreen is 0 and the maximum value is 5.892, indicating that there is a large difference between the green innovation capabilities of the sample companies. Meanwhile, the average value of LnGreen is 0.515, indicating that the green innovation performance of most sample companies is low and there is still a large room for improvement. Second, explanatory variable IAQ fluctuates between 0.33 and 4, with a variance of 0.794, reflecting large differences in the internal auditing level of sample companies. Third, the descriptive statistical characteristics of the relevant control variables are basically consistent with those of the references. The above features provide an effective sample basis for further research. Table 2 —Variable descriptive statistics Variable Obs Mean Std.Dev. Min Max LnGreen 17303 0.515 0.868 0 5.892 IAQ 17303 2.776 0.794 0.333 4 Size 17303 22.431 1.296 19.406 26.452 Growth 17303 0.146 0.392 -0.653 3.894 ROA 17303 0.036 0.063 − .382 0.255 Board 17303 2.159 0.2 1.609 2.708 TobinQ 17303 2.011 1.331 0.802 16.647 Top10 17303 0.54 0.152 0.208 0.91 Balance 17303 0.323 0.289 0.005 1 ListAge 17303 2.539 0.464 1.386 3.401 4.2 The impact of internal auditing on corporate green innovation Table 3 reports the regression results of the impact of internal auditing on green innovation. Column ( 1 ) is the regression result that only includes the year fixed effect, and the coefficient of LnGreen is 0.0726, showing a significant positive correlation at the 1% level. Column ( 2 ) shows the fixed-effect regression results including year and industry, and the LnGreen coefficient is 0.0627, which has significant statistical significance at 1% level. Column ( 3 ) shows the regression results of all control variables and industry clustering, and the LnGreen coefficient is 0.0627, showing a significant positive correlation at the 1% level. The results show that internal audit can improve enterprises' green innovation. This result tentatively confirms hypothesis H1. Table 3 —Regression Analysis Results Variable ( 1 ) ( 2 ) ( 3 ) LnGreen LnGreen LnGreen IAQ 0.0726 *** 0.0627 *** 0.0627 *** (0.0000) (0.0000) (0.0047) Size 0.3045 *** 0.3007 *** 0.3007 *** (0.0000) (0.0000) (0.0005) Growth -0.0012 -0.0128 -0.0128 (0.9417) (0.3845) (0.3872) ROA -0.2815 *** -0.1936 ** -0.1936 * (0.0055) (0.0426) (0.0959) Board 0.0063 -0.0184 -0.0184 (0.8401) (0.5291) (0.7927) TobinQ 0.0341 *** 0.0292 *** 0.0292 (0.0000) (0.0000) (0.1307) Top10 -0.4463 *** -0.3043 *** -0.3043 ** (0.0000) (0.0000) (0.0209) Balance 0.0061 -0.0054 -0.0054 (0.7687) (0.7802) (0.8816) ListAge -0.2034 *** -0.0756 *** -0.0756 ** (0.0000) (0.0000) (0.0176) Constant -5.8338 *** -6.0578 *** -6.0578 *** (0.0000) (0.0000) (0.0008) Year FE Y Y Y Industry FE N Y Y Industry Cluster N N Y Observations 17303 17303 17303 Adj.R 2 0.211 0.318 0.318 p -values in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01 4.3 Robustness tests and addressing endogeneity 4.3.1 Robustness tests 1. Changing the independent variable Replace the above green innovation measurement indicators and select the natural logarithm of the total number of invention and practical green patents after adding 1 filed by the firm each year as the alternative variable for testing. The regression results in column ( 1 ) of Table 4 show that the coefficient of IAQ, the core explanatory variable, is significantly positive at the 5% level, and the benchmark regression results are still robust. 2. Changing the dependent variable The internal auditing level is regrouped by the annual industry median and variable IAQ1 is defined. Sample IAQ1 greater than or equal to the median is assigned 1, otherwise assigned 0. Return to IAQ with IAQ1. The regression results in column ( 2 ) of Table 4 show that the coefficient of variable IAQ1 is significantly positive at the level of 1%, and the benchmark regression results are still robust. 3. Using industry and year bidirectional clustering standard error The standard error in bidirectional clustering can better control the influence of individual and time effects on the estimation results and provide information about the accuracy and reliability of the clustering. Therefore, to obtain more robust regression results, we re-regressed Model ( 1 ) using bidirectional clustering standard error at the industry and year levels. The regression results of column ( 3 ) in Table 4 show that the coefficient of IAQ is still significantly positive at the level of 1%, and the benchmark regression results are still robust. 4. Cluster analysis based on individual company level In the basic regression, we adopted industry-level cluster analysis. To avoid the interference of company-level factors on the research results, we further adopted company-level cluster analysis to conduct robustness test. The specific results are shown in column ( 4 ) of Table 4 . The results show that the coefficient of variable IAQ is significantly positive at the 1% level, indicating that internal audit and green innovation still show a significant positive correlation based on the company-level cluster analysis, thus further verifying the robustness of the basic regression results. 5. Lagged Regression Analysis of Explanatory Variables Considering the time lag between R&D activities and patent applications, we used the lagged dependent variable F.LnGreen to re-estimate Model ( 2 ). The results, presented in Table 4 , column ( 5 ), indicate that IAQ remains positively significant at the 1% level, further validating the positive impact of internal auditing on green innovation. 6. Change the sample scope Due to the global outbreak of COVID-19 in 2020, enterprises are faced with many difficulties such as delayed resumption of work, broken capital chain, and decreased R&D investment. To avoid the interference of this unexpected event on the research results, this paper excludes samples from 2020, 2021 and 2022 and conducts a robustness test. The specific results are shown in column ( 6 ) of Table 4 . The results show that the coefficient of IAQ is still significantly positive at 1% level, and the benchmark regression results are still robust. Table 4 —Robustness tests results Variable ( 1 ) ( 2 ) ( 3 ) ( 4 ) ( 5 ) ( 6 ) LnGI LnGreen LnGreen LnGreen F.LnGreen LnGreen IAQ 0.0566 ** 0.0627 *** 0.0627 *** 0.0790 *** 0.0663 *** (0.0239) (0.0090) (0.0000) (0.0044) (0.0011) IAQ1 0.0602 *** (0.0056) Size 0.4309 *** 0.3006 *** 0.3007 *** 0.3007 *** 0.3031 *** 0.2728 *** (0.0001) (0.0005) (0.0010) (0.0000) (0.0007) (0.0012) Growth -0.0255 -0.0124 -0.0128 -0.0128 0.0141 -0.0334 ** (0.2940) (0.4006) (0.4172) (0.4173) (0.4762) (0.0289) ROA -0.0285 -0.1930 * -0.1936 * -0.1936 -0.0231 -0.1801 (0.9020) (0.0965) (0.0954) (0.1749) (0.8912) (0.1956) Board 0.0408 -0.0183 -0.0184 -0.0184 0.0065 -0.0034 (0.5875) (0.7929) (0.7801) (0.7704) (0.9340) (0.9588) TobinQ 0.0489 0.0292 0.0292 0.0292 *** 0.0256 0.0306 * (0.1412) (0.1306) (0.1244) (0.0011) (0.2113) (0.0999) Top10 -0.5061 *** -0.3048 ** -0.3043 ** -0.3043 *** -0.3369 ** -0.3221 ** (0.0042) (0.0205) (0.0263) (0.0005) (0.0180) (0.0119) Balance 0.0163 -0.0054 -0.0054 -0.0054 -0.0170 -0.0000 (0.6900) (0.8828) (0.8816) (0.8902) (0.6276) (0.9994) ListAge -0.0719 * -0.0755 ** -0.0756 ** -0.0756 ** -0.0688 ** -0.0833 *** (0.0923) (0.0177) (0.0156) (0.0123) (0.0263) (0.0074) Constant -8.7669 *** -6.0486 *** -6.0578 *** -6.0578 *** -6.1847 *** -5.4870 *** (0.0002) (0.0009) (0.0015) (0.0000) (0.0011) (0.0019) Year FE Y Y Y Y Y Y Industry FE Y Y Y Y Y Y Observations 17303 17303 17303 17303 14102 13106 Adj.R 2 0.357 0.318 0.318 0.318 0.310 0.293 p -values in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01 4.3.2 Addressing endogeneity 1. PSM This study may also have endogenous problems caused by data bias and confounding factors, so propensity score matching (PSM) was used to correct them. In this paper, IAQ is divided into high and low groups based on the annual industry median, and the dummy variable IAQ1 is set accordingly. IAQ1 above the median is assigned a value of 1, otherwise 0. Then IAQ1 was used to perform Logistic regression on all control variables to obtain the scores of each observed value. Based on this score, the regression of model ( 2 ) was performed by means of nearest neighbour matching (1:3), radius matching (0.01) and kernel matching, respectively. The ATT of the three matching methods passed the test and passed the balance test. Column ( 1 )–( 3 ) of Table 5 list the regression results after PSM. In Table 5 , column ( 1 ) is the regression result of nearest neighbour matching (1:3), column ( 2 ) is the regression result of radius matching (0.01), and column ( 3 ) is the regression result of kernel matching. The coefficients of IAQ were all significantly positive at the level of 1%, indicating that the study conclusion was robust after controlling endogeneity. 2. 2SLS To alleviate the possible endogenous problem of mutual causation between corporate green innovation and internal auditing, that is, the company with strong green innovation ability has better quality and can effectively improve the internal audit level, this paper adopts the two-stage least square method to deal with it. In the first stage, we adopted the annual IAQ industry mean excluding the target enterprise as the instrumental variable IV and used IV to perform regression on the endogenous variables to obtain the predicted value P_IAQ, as shown in column ( 4 ) of Table 5 . In the second stage, P_IAQ was used as an independent variable to perform regression on model ( 1 ), as shown in column ( 5 ) of Table 5 . The coefficient of P_IAQ is still significantly positive, and the benchmark regression results still support H1. Table 5 —Endogeneity tests Variable ( 1 ) ( 2 ) ( 3 ) ( 4 ) ( 5 ) LnGreen (Nearest Neighbor Matching) LnGreen (Radius Matching) LnGreen (Kernel Matching) LnGreen (IV-first stage) LnGreen (IV-second stage) IAQ 0.054 *** 0.051 *** 0.051 *** (0.000) (0.000) (0.000) IV 0.5743 *** P_IAQ (0.0000) 0.1081 *** (0.0033) Size 0.302 *** 0.305 *** 0.305 *** 0.3450 *** 0.2502 *** (0.000) (0.000) (0.000) (0.0000) (0.0005) Growth -0.029 ** -0.021 -0.021 -0.0417 ** -0.0123 (0.040) (0.119) (0.123) (0.0177) (0.3932) ROA -0.196 ** -0.177 ** -0.176 ** -0.6161 *** -0.0967 (0.032) (0.041) (0.043) (0.0000) (0.3805) Board 0.018 0.026 0.027 -0.1418 *** 0.0173 (0.573) (0.380) (0.363) (0.0000) (0.7853) TobinQ 0.034 *** 0.035 *** 0.034 *** 0.0339 *** 0.0220 * (0.000) (0.000) (0.000) (0.0000) (0.0936) Top10 -0.204 *** -0.200 *** -0.199 *** -0.3821 *** -0.2210 * (0.000) (0.000) (0.000) (0.0000) (0.0889) Balance -0.021 -0.014 -0.015 0.0399 * -0.0022 (0.274) (0.461) (0.424) (0.0864) (0.9534) ListAge -0.022 -0.027 * -0.026 * -0.1152 *** -0.0338 (0.137) (0.061) (0.066) (0.0000) (0.2507) Constant -6.335 *** -6.411 *** -6.407 *** -8.0676 *** -5.0239 *** (0.000) (0.000) (0.000) (0.0000) (0.0006) Year FE Y Y Y Y Y Industry FE Y Y Y Y Y Observations 15,712 17,284 17,303 17302 17295 Adj.R 2 0.361 0.364 0.364 . 0.373 p -values in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01 4.4 Mechanism test To alleviate the possible endogenous problem of mutual causality between enterprise green innovation and internal auditing, that is, companies with strong green innovation capabilities are of better quality and can effectively improve the level of internal auditing, this paper uses the two-stage least squares method to deal with it. Therefore, we conducted an analysis of the intermediary effect based on the study of Jiang (2022) to test whether it is a channel for internal auditing to influence green innovation. 4.4.1 Executive green awareness Text analysis has been shown to be an effective method for assessing executive green awareness, particularly in longitudinal studies (Duriau et al., 2000). In this study, we apply a text analysis approach focusing on three dimensions: green competitive advantage, corporate social responsibility, and external environmental pressure. A series of keywords, such as "energy conservation," "environmental strategy," "environmental philosophy," "environmental management institutions," "environmental education," "environmental training," "environmental technology development," "environmental auditing," "low-carbon practices," "environmental policies," "environmental departments," "environmental inspections," "environmental governance," and "environmental pollution control," were selected. These terms were used to measure executive green awareness by analyzing their frequency of appearance in the annual reports of listed companies from 2007 to 2022. As shown in column ( 1 ) of Table 6 , the regression results indicate that IAQ is significantly positively associated with executive green awareness at the 1% level. This finding suggests that internal auditing quality is strongly correlated with higher levels of executive green awareness. Furthermore, the results confirm that executive green awareness acts as a positive mechanism in the relationship between internal auditing and green innovation, supporting Hypothesis 2. 4.4.2 Corporate risk tolerance Higher risk tolerance means increased uncertainty in future cash flows, and earnings volatility is the most widely used measure of risk tolerance. Therefore, this study primarily uses Return on Assets (ROA) during the observation period (measured as EBITDA divided by total assets at year-end). Based on the research of John et al. (2008) and Yu et al. (2013), the formula ( 3 ) is used to subtract the industry average ROA for the year to obtain ADJ_ROA to alleviate industry and cyclical effects. Given the large number of manufacturing listed companies in China, which account for over 70% of the total sample, the industry classification for manufacturing companies is refined to two-digit codes, and samples where only one company exists in the industry are excluded. The calculation method in formula ( 4 ) is used, with each observation period spanning five years (from t-2 to t + 2). The standard deviation and range of the industry-adjusted ROA (Adj_ROA) are calculated to obtain two indicators: Risk1 and Risk2, which measure corporate risk tolerance. The larger the values of Risk1 and Risk2, the greater the earnings volatility, indicating a higher level of corporate risk tolerance. The regression results are shown in Table 6 : Columns ( 2 ) and ( 3 ) indicate that whether using standard deviation (Risk1) or range (Risk2) as the measure, the IAQ coefficient is significantly positive at the 5% statistical level, with values of 0.0008 and 0.0017, respectively. This suggests that internal audit is positively related to corporate risk tolerance, and internal audit can enhance corporate green innovation performance by improving the level risk tolerance. Hypothesis H3 is supported. (Here, i represents a firm, and n denotes the year within the observation window, taking values from 1 to 5. X refers to the total number of firms in a specific industry, while k represents the k -th firm within that industry.) 4.4.3 Corporate financialization This study defines corporate financialization as the ratio of financial assets to total assets. Referring to the works of Demir (2009) and Du et al. (2019), we calculate the level of corporate financialization (FINRATIO) using the formula FIN = FA / TA, where FA represents financial assets, which include trading financial assets, derivative financial assets, loans and advances (net), available-for-sale financial assets (net), held-to-maturity investments (net), and investment properties (net). TA represents the average value of total assets at the beginning and end of the year. Additionally, after 2018, accounting standards adjusted the classification of financial assets. Held-to-maturity investments were reclassified as bond investments, and available-for-sale financial assets were reclassified as other debt investments and other equity investments. Therefore, FA now includes trading financial assets, derivative financial assets, loans and advances (net), other debt investments and other equity investments (net), bond investments (net), and investment properties (net). According to column ( 4 ) in Table 6 , the coefficient of IAQ is significantly negative at the 1% level, with a value of -0.0029, indicating that internal audit is significantly negatively correlated with corporate financialization. Based on the mediation effect, the improvement in internal audit quality can promote green innovation development by suppressing corporate financialization. The results support H4. Table 6 —Mechanism test Variable ( 1 ) ( 2 ) ( 3 ) ( 4 ) Executive green Cognition Risk 1 Risk 2 FINRATIO IAQ 0.1250 ** 0.0008 ** 0.0017 ** -0.0029 *** (0.0125) (0.0130) (0.0250) (0.0002) Size 0.5041 *** -0.0022 *** -0.0055 *** -0.0078 *** (0.0000) (0.0000) (0.0000) (0.0000) Growth -0.0004 0.0026 *** 0.0057 *** -0.0077 *** (0.9970) (0.0001) (0.0004) (0.0000) ROA -1.4770 ** -0.1541 *** -0.3585 *** 0.0875 *** (0.0276) (0.0000) (0.0000) (0.0000) Board 0.6276 *** -0.0081 *** -0.0206 *** -0.0182 *** (0.0026) (0.0000) (0.0000) (0.0000) TobinQ -0.2574 *** 0.0039 *** 0.0092 *** -0.0020 *** (0.0000) (0.0000) (0.0000) (0.0004) Top10 0.6599 ** -0.0053 *** -0.0128 *** -0.0084 * (0.0240) (0.0052) (0.0046) (0.0669) Balance -0.5177 *** 0.0085 *** 0.0203 *** -0.0015 (0.0002) (0.0000) (0.0000) (0.4935) ListAge -0.3068 *** -0.0013 ** -0.0028 * 0.0194 *** (0.0029) (0.0330) (0.0650) (0.0000) Constant -9.0489 *** 0.1007 *** 0.2482 *** 0.2276 *** (0.0000) (0.0000) (0.0000) (0.0000) Year FE Y Y Y Y Industry FE Y Y Y Y Observations 14815 14255 14255 17303 Adj.R 2 0.151 0.185 0.182 0.148 p -values in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01 5. Further analysis 5.1 Moderating Role of Internal Control Wang et al. (2022) argue that a robust internal control environment promotes green innovation by mitigating risks, resolving agency conflicts, alleviating financing constraints, and enhancing the rationality of innovation investments. Similarly, Ma et al. (2022) demonstrates that strengthening internal control mechanisms improves operational efficiency, reduces financialization, and provides the necessary resources for innovation activities. This lowers the uncertainties associated with green innovation risks and drives green investments. The pathways through which internal control facilitates green innovation are thus comparable to those of internal auditing. A high-quality internal control environment reduces innovation risks and incentivizes greater investments in green innovation. Given the synergistic and interactive relationship between internal auditing and internal control (Vijayakumar & Nagaraja, 2012), the effectiveness of internal auditing in enhancing green innovation is amplified in the presence of high-quality internal control. To test the moderating role of internal control, we used the DIB Internal Control Index (Quintile), where higher scores indicate better internal control quality. The index assigns values of 8, 7, 6, 5, 4, 3, 2, and 1 to ratings of AAA, AA, A, BBB, BB, B, C, and D, respectively. We introduced an interaction term, Quintile × IAQ, into Model ( 2 ). As shown in Table 7 , column ( 1 ), the coefficient of the interaction term is significantly positive, indicating that high internal control quality strengthens the positive relationship between internal auditing and green innovation. 5.2 Moderating Role of Ownership Structure State-owned enterprises (SOEs) are an important pillar of China's national economy, and their development is directly related to the high-quality growth of the social economy. As the country places more emphasis on the environmental benefits of businesses, SOEs have been leading the way in responding to environmental issues and are taking a leadership role in green innovation (Gao et al., 2021). Furthermore, SOEs have significant policy advantages compared to non-state-owned enterprises. As companies established or partially owned by the government, SOEs have easier access to tax incentives, government subsidies, and multiple financing channels with lower financing costs, which allows them to overcome the financing constraints of green innovation. Additionally, SOEs generally have a higher risk-bearing capacity. However, due to the rigid management mechanisms in place within SOEs, they tend to face issues such as a lack of innovation, insufficient R&D investment, and inadequate supervision, which are not conducive to green innovation. Therefore, to examine the differences in the impact of internal auditing on green innovation based on ownership nature, we categorize the sample companies into state-owned and non-state-owned enterprises. We then add the interaction term SOE×IAQ in model ( 2 ) for regression. Column ( 2 ) in Table 7 shows that both internal auditing and ownership nature are positively correlated with green innovation. However, the interaction term SOE×IAQ is negatively correlated with green innovation at the 10% statistical level. This result suggests that internal audit has a more pronounced positive effect on green innovation in non-state-owned enterprises, which tend to face more intense market competition and financing constraints. In contrast to the resource advantages of SOEs, non-state-owned enterprises often need higher green awareness and greater efforts in green technological innovation to acquire the resources needed for innovation, reduce financialization, and enhance resource utilization efficiency and competitiveness for sustainable development. 5.3 Moderating Role of firm size Firm size significantly influences management practices, development strategies, R&D capabilities, and profitability. Larger firms often face declining managerial efficiency and diminishing returns to scale, necessitating green innovation to optimize resource utilization and production efficiency. Additionally, as firm size increases, so does information asymmetry, which heightens the need for high-quality internal auditing with elevated reporting levels (Wu, 2022). Larger firms also benefit from superior financial resources, advanced technological infrastructure, and an ample pool of R&D personnel. Combined with progressive managerial thinking and higher green awareness, these factors enhance their capacity to undertake green innovation activities, thereby improving innovation efficiency. Conversely, many small and medium-sized enterprises (SMEs) are characterized by unified ownership and management, where control and ownership rights are concentrated in a single individual. This lack of separation often leads to self-serving managerial behaviors, prioritizing short-term financial gains over long-term green innovation. Furthermore, SMEs frequently lack sufficient financial expertise and fail to establish robust internal audit systems. Their internal audit functions are often poorly structured, with narrowly defined responsibilities, simplistic methods, and superficial execution, limiting their ability to support green innovation. To investigate the moderating effect of firm size, we introduced an interaction term, Scale × IAQ, into Model ( 2 ). The results, presented in Table 7 , column ( 3 ), show that the coefficient of the interaction term is significantly positive. This indicates that firm size amplifies the positive relationship between internal auditing and green innovation. Larger firms are better positioned to leverage internal auditing to enhance governance, mitigate risks, and allocate resources effectively, thereby fostering green innovation. 5.4 Moderating Role of Analyst Attention As an important mechanism to reduce information asymmetry and agency costs, the role of securities analysts has permeated many economic activities. Research shows that securities analysts impact the efficiency of capital markets by increasing the information available to investors, improving corporate information disclosure quality, and significantly enhancing the efficiency of market resource allocation (Lys & Sohn, 1990). Moreover, studies have shown that analyst coverage significantly boosts a company's innovation performance, as evidenced by a notable increase in patent outputs. Unlike corporate managers, analysts are independent third-party intermediaries who can more objectively and impartially communicate known information to investors. By helping investors better understand the value of corporate innovation activities, analysts prevent the undervaluation of innovative firms, thereby enhancing managers' willingness to invest in innovation (Manso, 2011) and increasing executives' green awareness. This helps firms allocate resources for green innovation, reduce financialization, and ensure the availability of resources. Therefore, to examine the moderating effect of analyst attention on the relationship between internal audit and green innovation, we use the number of research reports on the same listed company (ReportAttention) as a measure of analyst attention. We then add the interaction term ReportAttention×IAQ in model ( 2 ) for regression. The results in column ( 4 ) of Table 7 show that the coefficient of the interaction term is significantly positive at the 5% statistical level, indicating that the higher the analyst attention, the stronger the positive relationship between internal audit and green innovation. Analyst attention increases executives' green awareness and promotes enterprises to achieve the sustainable development between business growth and the environment stewardship through green innovation, enhancing the company's reputation and brand image. Table 7 —Moderating effect Variable M = Quintile M = SOE M = Scale M = ReportAttention ( 1 ) ( 2 ) ( 3 ) ( 4 ) LnGreen LnGreen LnGreen LnGreen IAQ 0.0424 *** 0.0943 *** 0.0423 ** 0.0080 (0.0009) (0.0092) (0.0122) (0.5553) M -0.0142 0.1673 ** -0.1211 -0.0062 *** (0.1003) (0.0130) (0.4063) (0.0022) M×IAQ 0.0552 * -0.0668 * 0.1292 ** 0.0026 ** (0.0575) (0.0798) (0.0172) (0.0141) Size 0.3025 *** 0.3004 *** 0.2358 *** 0.3042 *** (0.0000) (0.0006) (0.0011) (0.0001) Growth -0.0132 -0.0127 -0.0181 -0.0348 ** (0.3714) (0.4013) (0.2681) (0.0211) ROA -0.2382 ** -0.2050 * -0.0749 -0.3081 (0.0213) (0.0923) (0.4505) (0.1340) Board -0.0191 -0.0104 0.0066 -0.0145 (0.5134) (0.8584) (0.9181) (0.8528) TobinQ 0.0303 *** 0.0285 0.0169 0.0127 (0.0000) (0.1309) (0.1836) (0.3810) Top10 -0.3044 *** -0.3026 ** -0.2789 ** -0.3359 ** (0.0000) (0.0133) (0.0453) (0.0303) Balance -0.0041 -0.0099 0.0005 -0.0045 (0.8312) (0.7792) (0.9902) (0.9090) ListAge -0.0753 *** -0.0679 ** -0.0462 -0.0947 ** (0.0000) (0.0456) (0.1330) (0.0221) Constant -6.1051 *** -6.1661 *** -4.7044 *** -5.9106 *** (0.0000) (0.0013) (0.0016) (0.0002) Year FE Y Y Y Y Industry FE Y Y Y Y Observations 17299 17303 17295 12204 Adj.R 2 0.318 0.319 0.367 0.350 p -values in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01 6. Conclusions and Implications 6.1 Conclusions This study examines the impact of internal auditing on corporate green innovation and its underlying mechanisms. First, we find that internal auditing, as a non-mandatory supervisory mechanism, significantly enhances green innovation as a strategic initiative, a conclusion that remains robust after various sensitivity and endogeneity tests. Second, by analyzing the full strategic implementation process: “strategic decision-making—risk assessment and undertaking—resource allocation and execution”, we identify three key pathways through which internal auditing fosters green innovation: guiding executive green awareness, promoting high corporate risk tolerance during risk assessments, and curbing financialization to secure resources for green initiatives. Finally, heterogeneity analysis reveals that the positive effect of internal auditing on green innovation is more pronounced in firms with high internal control quality, non-state ownership, larger scale and greater analyst attention. 6.2 Implications 6.2.1 Enterprises need to further innovate and improve internal audit error-correction mechanisms so that internal audits can effectively monitor and feedback on the company’s green innovation practices. Given the advantage of internal audits in monitoring insider information, they can quickly identify risks and defects in business decisions, improve the company’s green awareness, risk tolerance, and financialization levels, thus promoting green innovation and sustainable development. On one hand, management should place more emphasis on the design of internal audit systems to enhance the independence and authority of the internal audit department. On the other hand, the interaction mechanism between internal audits and corporate governance capabilities, risk assessment, and resource allocation should be coordinated, improving the economic and effective decision-making in significant corporate investments. 6.2.2 Enterprises should innovate their internal audit information management systems to strengthen the role of internal auditing in digital green governance. Management should explore the construction of a "business audit integration" digital platform that aligns with the company’s top-level strategy, investment and financing decisions, capital management, business operations, internal control, and risk management, based on changes in the company’s internal and external environment. This platform would integrate the micro-institutional advantages of internal audit’s risk disclosure into practice, using digital technologies to better leverage the governance function of internal auditing and promote sustainable development. Companies should also clarify the main entity responsibility for internal audit reports, strengthen the effectiveness of internal audits in overseeing the entire process — before, during, and after business activities — to improve resource utilization efficiency and ensure that each link in the company’s value chain can achieve value-added protection. 6.3 Restrictions and Upcoming Studies The internal audit mechanisms and conclusions drawn from this study regarding their influence on corporate green innovation are based on the unique situation in China and may be applicable only to listed companies in China or other emerging market economies. These findings may not apply to non-listed companies in China or companies in other institutional contexts. Future research should use samples from various countries and regions and include different types of firms to test the consistency of these results. 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Liu G, Wang J, Sun Y, Guo J, Zhao Y. Internal Audit Quality and Accounting Information Comparability: Evidence from China. PLOS ONE. 2024;19(10): e0310959. Lys T, Sohn S. The Association between Revisions of Financial Analysts Earnings Forecasts and Security Price Changes. Journal of Accounting and Economics. 1990;13(4): 341-363. Ma X, Ock Y-S, Wu F, Zhang Z. The Effect of Internal Control on Green Innovation: Corporate Environmental Investment as a Mediator. Sustainability. 2022;14: 1755. Magat W A. Pollution control and technological advance: A dynamic model of the firm[J]. Journal of Environmental Economics and Management. 1978;5(1): 1-25. Manso G, Motivating Innovation. The Journal of Finance. 2011;66(5): 1823-1860 Murphy C. M. Corporate Governance and Sustainability: Strategies for Creating Shareholder Value. Financial Analysts Journal. 2017;73(3): 47-65. Narayanaswamy R, Raghunandan K, Rama DV. Internal Auditing in India and China: Some Empirical Evidence and Issues for Research. Journal of Accounting, Auditing & Finance. 2019;34(4):511-523. Nadeem M., Bahadar S., Gull A. A., et al. Are women eco‐friendly? Board gender diversity and environmental innovation. Business Strategy and the Environment. 2020;29(8): 3146-3161. Orhangazi, O. Financialisation and Capital Accumulation in the Non-financial Corporate Sector: A Theoretical and Empirical Investigation on the US Economy: 1973-2003. Cambridge Journal of Economics. 2008;32(6):863-886. Pizzini M, Shu L, Ziegenfuss DE. The Impact of Internal Audit Function Quality and Contribution on Audit Delay. Auditing: A Journal of Practice & Theory. 2015;34(1):25-58. Polzin, F. Mobilizing Private Finance for Low-carbon Innovation: A Systematic Review of Barriers and Solutions. Renew. Sustain. Energy Rev. 2017;77: 525–535. Prawitt DF, Smith JL, Wood DA. Internal Audit Quality and Earnings Management. Accounting Review. 2009; 84(4): 1255-80. Renschler ME, Ahn J, Hoitash R, Hoitash U. Internal Audit Competency and Financial Reporting Quality: Evidence from LinkedIn Human Capital Data. Auditing: A Journal of Practice & Theory. 2023;42(3):107-136. Vijayakumar AN, Nagaraja N. Internal Control Systems: Effectiveness of Internal Audit in Risk Management at Public Sector Enterprises. BVIMR Management Edge. 2012;5(1):1-8. Wang C, Chen P, Hao Y and Dagestani AA, Tax incentives and green innovation—The mediating role of financing constraints and the moderating role of subsidies. Front. Environ. Sci. 2022;10: 1067534. Wang C, Wang FF, Jiang P. Does environmental regulation truly enhance corporate green environmental investment? Evidence from the supervision of independent directors in listed companies. Frontiers in Psychology. 2024;15. Wang J, Ma M, Dong T, Zhang Z, Do ESG ratings promote corporate green innovation? A quasi-natural experiment based on SynTao Green Finance’s ESG ratings. International Review of Financial Analysis. 2023;87: 1-14. Wang P, Bu H, Liu F. Internal Control and Enterprise Green Innovation. Energies. 2022; 15:2193. Wang Y, Qiu YTT, Luo Y. CEO foreign experience and corporate sustainable development: Evidence from China. Business Strategy and The Environment. 2022;31(05): 2036-2051. Wei X, Yuan Z. An Empirical Research on the Level of Internal Audit and the Degree of Earnings Management: Based on the Data of A-share Listed Companies. China Accounting Review. 2014;12(Z1):453-66. (in Chinese) Wu Y, Zhang J, Liu SL, Ma LR. Does Government-Led Publicity Enhance Corporate Green Behavior? Empirical Evidence from Green in China. Sustainability. 2022; 14(06). Xu XM, Jing RL, Lu FF. Environmental Regulation, Corporate Social Responsibility (CSR) Disclosure and Enterprise Green Innovation: Evidence from Listed Companies in China. International Journal of Environmental Research and Public Health. 2022;19(22). Yang W, Lai P, Han Z, Tang Z. Do government policies drive institutional preferences on green investment? Evidence from China. Environmental Science and Pollution Research. 2023;30(03): 8297-8316. Ying Y, Jin, S. Impact of Environmental Regulation on Corporate Green Technological Innovation: The Moderating Role of Corporate Governance and Environmental Information Disclosure. Sustainability. 2024;16: 3006. Yu M, Li WG, Pan HB. Managerial overconfidence and corporate risk taking. Journal of Financial Research, 2013;(01): 149-163. (in Chinese) Yuan GC, Li JJ. Impact and spillover effect of mixed-ownership reform on the green innovation of state-owned enterprises. China Population, Resources and Environment. 2023;33(7):180-190. Zha Z. The Effect of Corporate Governance Mechanisms on Green Innovation Performance. Economic Research Journal. 2020;57(6):137-150. Zhang F, Qin X, Liu L. The Interaction Effect between ESG and Green Innovation and Its Impact on Firm Value from the Perspective of Information Disclosure. Sustainability. 2020;12(5): 1866‒1884. Zhao Y, Mao J, Li Y. Local governments’ environmental emphasis and corporate green innovation: evidence from China. Economic Change and Restructuring. 2022;55: 2577–2603. Additional Declarations No competing interests reported. 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Introduction","content":"\u003cp\u003eWith the rapid development of the global economy, enterprises across countries are facing numerous challenges arising from environmental changes, such as excessive resource consumption, pollution, and environmental degradation. Consequently, the pursuit of sustainable development strategies that enable a \u0026ldquo;harmonious coexistence\u0026rdquo; between corporate growth and the environment has become a global issue. Currently, the widely recognized view, supported by governments, consumers, and other stakeholders, is that green innovation is a key strategy for achieving corporate sustainability (Huang and Li, 2017). Green innovation, through the adoption of new technologies and methods, not only reduces pollutant emissions and improves pollution control efficiency, but also enhances resource utilization, lowers production costs, and drives sustainable economic development (Magat, 1978). It is an essential tool for achieving both environmental protection and technological advancement and serves as a crucial means for firms to gain competitive advantages and adapt to increasingly stringent environmental regulations. China\u0026rsquo;s early development model, which prioritized economic growth at the expense of the environment, has hindered comprehensive societal health (Wang et al., 2023). Currently, China's overall level of green innovation remains relatively low, with significant regional disparities (Li and Li, 2024). Therefore, understanding how to enhance the green innovation capabilities of Chinese firms is not only pivotal for China's transition to high-quality development, but also offers valuable insights for other countries struggling with green innovation. This research also responds to an urgent demand for academic investigation into this area.\u003c/p\u003e \u003cp\u003ePrevious studies indicate that corporate green innovation typically follows the logic of \u0026ldquo;external pressure \u0026rarr; green behavior \u0026rarr; corporate performance,\u0026rdquo; influenced by both external factors such as institutional and market environment, and internal factors including corporate governance and executive characteristics. External drivers include environmental regulations (Hu et al., 2022) and government subsidies (Han et al., 2024), while internal factors are often examined through the lens of agency theory, highlighting the importance of internal governance in enhancing green innovation (Cuerva et al., 2014). Green innovation is characterized by significant financial requirements, long cycles, and high uncertainty, as well as unique knowledge and environmental cost spillovers. As such, firms may face challenges in achieving cost compensation through green innovation and are more susceptible to financing difficulties and agency conflicts (Polzin, 2017). Research has primarily explored the influence of factors such as internal controls (Ma et al., 2022), corporate social responsibility disclosures (Xu et al., 2022), executive environmental awareness (Zhao et al., 2022), and board diversity (Nadeem et al., 2020; Lin et al., 2024) on green technological innovation from an internal organizational perspective. Most studies focus on the impact of mandatory policy measures on green innovation, while research on non-mandatory regulations is relatively scarce. As a non-mandatory mechanism that enhances corporate governance, internal audit relies more on self-regulation and social responsibility awareness. It allows organizations to flexibly promote resource allocation according to their resource conditions and technological capabilities, while mitigating agency conflicts and information asymmetry. Therefore, exploring whether internal audit can strengthen corporate responsibility for green innovation, enhance environmental awareness, alleviate agency conflicts, and thus promote corporate green innovation, holds profound significance.\u003c/p\u003e \u003cp\u003eWhile existing research suggests that internal controls, as part of internal governance mechanisms, can enhance firm value (Wang et al., 2022), internal auditing offers distinct advantages. Compared to internal controls, internal auditing normalizes auditing and supervision mechanisms and, as an internal functional department, possesses a clear information advantage. Through the collection and analysis of internal information and effective communication with various business departments, internal auditing can monitor the overall business status, identify weaknesses in internal controls, and assess risk factors. By directly feeding back this information to senior management via internal reports, internal auditing plays a key supervisory role as the \u0026ldquo;third line of defense,\u0026rdquo; ensuring that both the subject and operation process of authority are effectively monitored and improving the quality of financial reporting (Abbott, 2016). This, in turn, provides institutional support for green innovation.\u003c/p\u003e \u003cp\u003eFurthermore, this study focuses on China for several key reasons. Firstly, as the world\u0026rsquo;s second-largest economy, China\u0026rsquo;s capital markets are maturing, and the gradual strengthening of internal auditing practices in recent years provides a dynamic environment to study its influence on corporate behavior. Secondly, China\u0026rsquo;s corporate structure exhibits significant differences in ownership types, with state-owned and private enterprises differing notably in governance structures and market competition, offering a unique perspective on the heterogeneous effects of internal auditing. Additionally, as a developing country with a heavy industrial base and numerous high-pollution firms, the role of internal auditing in promoting green governance is particularly important in these sectors. Studying China will not only help analyze the mechanisms through which internal auditing affects firms of different types but also shed light on its role in promoting green innovation, offering valuable insights for other developing countries facing similar challenges.\u003c/p\u003e \u003cp\u003eThus, this study empirically analyzes the impact of internal auditing on corporate green innovation using data from Chinese A-share listed companies between 2007 and 2022. The findings reveal that: (\u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e1\u003c/span\u003e) Internal auditing significantly enhances green innovation, with results remaining robust after a series of tests for robustness and endogeneity. (\u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2\u003c/span\u003e) Mechanism analysis indicates that internal auditing promotes green innovation by guiding executive awareness of environmental issues, improving risk tolerance, and reducing financialization to provide resource support, through the entire strategic implementation process\u0026mdash;spanning \u0026ldquo;strategic choice and decision-making, risk assessment, and resource allocation.\u0026rdquo; (\u003cspan citationid=\"CR3\" class=\"CitationRef\"\u003e3\u003c/span\u003e) Heterogeneity analysis shows that factors such as internal control quality, non-state ownership type, firm size, and analyst attention strengthen the positive relationship between internal auditing and green innovation.\u003c/p\u003e \u003cp\u003eThis study makes both theoretical and practical contributions. Theoretically, it clarifies the mechanisms through which internal auditing affects green innovation. By integrating corporate governance and environmental management theories, this study shows that internal auditing fosters green innovation through three main paths: enhancing executive green awareness, increasing risk tolerance, and reducing financialization. It also provides comparative analysis of the governance effects of internal auditing at four levels: internal control, ownership type, firm size, and analyst attention. This enriches the literature on internal auditing\u0026rsquo;s governance role. Secondly, from the perspective of corporate governance, this research deepens our understanding of the internal drivers of green innovation. While previous literature has largely focused on board governance and ownership structure, the role of internal auditing has been underexplored, and this study addresses that gap.\u003c/p\u003e \u003cp\u003ePractically, this study highlights the importance of internal auditing in monitoring and promoting green innovation practices. First, it provides valuable insights for firms to improve their internal auditing systems, as internal auditing plays a crucial role in mitigating agency problems and fostering innovation and sustainability. Companies should strengthen their commitment to internal auditing, improve its independence and authority, and enhance its role in corporate governance. Second, this research informs strategies for enhancing green innovation, emphasizing the need for firms to guide executives in improving their environmental awareness, risk management capabilities, and reducing financialization to foster sustainable development.\u003c/p\u003e \u003cp\u003eThe remainder of this paper is structured as follows: Section \u003cspan refid=\"Sec2\" class=\"InternalRef\"\u003e2\u003c/span\u003e presents the literature review and hypothesis development; Section \u003cspan refid=\"Sec11\" class=\"InternalRef\"\u003e3\u003c/span\u003e outlines the research design; Section \u003cspan refid=\"Sec18\" class=\"InternalRef\"\u003e4\u003c/span\u003e discusses the empirical results, endogeneity tests and mechanism analysis; Section \u003cspan refid=\"Sec27\" class=\"InternalRef\"\u003e5\u003c/span\u003e presents a heterogeneity analysis; and Section \u003cspan refid=\"Sec28\" class=\"InternalRef\"\u003e6\u003c/span\u003e concludes with policy implications and recommendations.\u003c/p\u003e"},{"header":"2. Literature review and theoretical hypothesis","content":"\u003cp\u003e\u003cstrong\u003e2.1 Research on economic consequences of internal audit\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eInternal auditing is widely regarded as a critical tool for corporate governance and operational effectiveness (IIA, 2010). Initially, the role of internal auditing focused primarily on compliance assurance, financial control, and asset protection (Allegrini et al., 2006; Dellai et al., 2016). However, over time, it has evolved through three historical stages\u0026mdash;supervision, control, and service. Today, the function of internal auditing emphasizes its role in creating value for organizations (Erasmus \u0026amp; Coetzee, 2018). Internal auditing can enhance corporate governance by effectively supervising managerial behavior (Prawitt et al., 2009), improving the quality of financial information (Jaggi, 2023; Renschler et al., 2023; Calvin \u0026amp; Holt, 2023), while also reducing information asymmetry (Narayanaswamy et al., 2019). These improvements, in turn, lead to a range of positive governance outcomes. Existing research has shown that internal auditing can help curb earnings management (Ege et al., 2022), reduce internal control deficiencies (Lin et al., 2011), and prevent corporate misconduct (Ege, 2015; Brink et al., 2022), as well as lower overall risk levels (Carcello et al., 2020) and enhance profitability (Liu, 2021).\u0026nbsp;\u003c/p\u003e\n\u003cp\u003eMoreover, compared to external auditing, studies indicate that internal auditing plays a key role in enhancing external auditors\u0026apos; trust in their functions (Čular et al., 2020). This increased trust not only fosters collaborative synergies within the audit process but also significantly reduces the costs associated with external auditing (Al-Dhamari, 2018; Felix et al., 2001; Abbott et al., 2012). Strengthening internal auditing further contributes to improving the efficiency and timeliness of external audits, ultimately optimizing the overall audit process (Pizzini et al., 2015).\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003e2.2 Research on the influencing factors of corporate green innovation\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eCurrent research on corporate green innovation primarily focuses on identifying its influencing factors, which can be broadly categorized into external and internal drivers. In terms of external drivers, key factors influencing the development of green innovation include government environmental subsidies (Han et al., 2024), the intensity of environmental regulations (Ying \u0026amp; Jin, 2024), environmental tax incentives (Wang et al., 2022), media attention, and market competition (Bai et al., 2023). Additionally, the advancement of green finance reforms (Jia et al., 2023) and the increasing level of digitalization within firms (Gao et al., 2023) have also contributed to promoting corporate green innovation.\u003c/p\u003e\n\u003cp\u003e\u0026nbsp;On the internal side, various governance mechanisms within firms play a pivotal role in shaping strategic decisions and practices related to green innovation. For example, the governance quality of boards of directors (Wang et al., 2024) and board diversity, particularly in terms of gender composition (Lin et al., 2024), have been shown to significantly enhance both the quantity and quality of green innovation. Furthermore, the reform of ownership structures through mixed-ownership models (Yuan \u0026amp; Li, 2023) and the introduction of strategic investors (Yang et al., 2023) have been identified as key channels for promoting green innovation in state-owned enterprises. Moreover, effective internal controls that alleviate financing constraints and promote environmental investment are critical drivers of green innovation (Ma et al., 2022). A firm\u0026rsquo;s internal governance not only determines its investments and resource allocation in green technology research and development but also influences the effectiveness of green innovation implementation through the external market and policy environments. Specifically, governance structures related to Environmental, Social, and Governance (ESG) practices and Corporate Social Responsibility (CSR) directly impact a firm\u0026rsquo;s capacity for green innovation (Wang et al., 2023). As a result, the relationship between corporate governance and green innovation has become a key focus of contemporary academic research.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003e2.3 Literature commentary\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eThe academic literature on the influencing factors of corporate green innovation and the economic consequences of internal auditing has yielded substantial insights, which provide valuable reference points for our study. However, it is evident that, despite the growing emphasis on audit supervision, few studies have focused on internal auditing as an entry point to examine its impact on corporate green innovation performance and its underlying mechanisms. While existing research has demonstrated that internal controls can also enhance green innovation (Wang et al., 2022), internal auditing possesses two distinct functions\u0026mdash;assurance and advisory\u0026mdash;that make it more conducive to improving the efficiency of green innovation. On the one hand, internal audit departments, with their specialized personnel and ability to execute multiple projects and provide effective feedback, are positioned to enhance the independence and authority of the audit process. This facilitates managerial oversight and helps alleviate agency problems (Prawitt et al., 2009), thereby promoting corporate green innovation. On the other hand, the advisory role of the audit committee, leveraging its professional expertise, can further contribute to the optimal allocation of firm resources, thereby providing crucial support for green innovation.\u003c/p\u003e\n\u003cp\u003eTherefore, this study aims to explore the \u0026quot;black box\u0026quot; of the mechanisms linking internal auditing to green innovation from both a theoretical and empirical perspective. By doing so, we seek to provide insights for optimizing internal auditing practices, enhancing corporate governance, and improving environmental management, with the goal of offering policy recommendations to foster the development of corporate green innovation.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003e2.4 Theoretical hypothesis\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003e2.4.1\u0026nbsp;\u003c/strong\u003e\u003cstrong\u003eInternal auditing and corporate green innovation\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eFirstly, based on agency theory, high-quality internal auditing enhances the reliability of both financial and non-financial information by effectively supervising managerial behavior (Christopher, 2023). It increases the transparency of financial information, curtails opportunistic behaviors by management, and reduces the level of earnings management (Ege et al., 2022). Furthermore, by mitigating the tendency of management to prioritize short-term profits over long-term investments, internal auditing encourages management to actively pursue high-risk and long-cycle green innovation projects. Secondly, within the fiduciary relationship between shareholders, the board of directors, and senior management, internal auditing plays an assurance role by conveying the true operational status of the firm to the governance bodies. This reduces information asymmetry between management and governance (Lin\u0026nbsp;et al., 2011) and helps alleviate agency conflicts. As a result, original shareholders are more willing to increase investments, thereby raising internal financing and easing financing constraints. This, in turn, incentivizes firms to allocate more resources to innovation. Moreover, internal auditing can oversee the rational allocation of corporate resources, mitigating conflicts among internal stakeholders and promoting coordination between departments. This enhances the overall efficiency of green innovation. Based on the above analysis, we propose the following hypothesis:\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eH1:\u003c/strong\u003e Internal auditing promotes corporate green innovation; that is, the higher the level of internal auditing, the stronger the firm\u0026rsquo;s capacity for green innovation.\u003c/p\u003e\n\u003cp\u003eInternal auditing serves as a supervisory mechanism within corporate governance, while green innovation is a strategic tool for firms pursuing sustainable development. To explore how governance mechanisms drive strategic development, we find that the role of internal auditing in promoting green innovation can be further examined through the strategic implementation process, which can be conceptualized as the flow from \u0026ldquo;strategic choice and decision-making\u0026mdash;risk assessment and assumption\u0026mdash;resource allocation and execution.\u0026rdquo;\u0026nbsp;\u003c/p\u003e\n\u003cp\u003eFirstly, during the process of strategic choice, the green awareness of senior management plays a leading role. As the management\u0026rsquo;s green consciousness is awakened, green innovation is viewed as the firm\u0026rsquo;s future development direction and a strategic priority, thus being integrated into the strategic framework. Secondly, when assessing strategic initiatives, both the risks and returns must be considered, weighing short-term financial risks against long-term strategic benefits. Green innovation often involves substantial investments, high levels of technological research and development, and market uncertainties. Firms that are willing to undertake high levels of risk are more likely to embrace these green innovation-related risks, gradually launching green projects, advancing technological R\u0026amp;D, and innovating products to foster technological and market transformation. Finally, during the transformation process, resources must be allocated and executed effectively. Green innovation typically requires large-scale, long-term investments, rather than focusing solely on short-term profits through financialization. To support green innovation, firms need to curb financialization, increase resource allocation for green investments, and ensure adequate resource support for green innovation initiatives. In sum, these three mechanisms are interconnected and mutually reinforcing. Together, they function through the corporate governance structure to balance their interactions and ensure the sustainability of green strategies.\u003c/p\u003e\n\u003cp\u003eNext, we will explore the specific pathways through which these three mechanisms operate between internal auditing and green innovation.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003e2.4.2\u003c/strong\u003e\u003cstrong\u003e\u0026nbsp;Mechanism of\u0026nbsp;\u003c/strong\u003e\u003cstrong\u003eexecutive green awareness\u0026nbsp;\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eFirstly, internal auditing can promote corporate green innovation by enhancing risk identification and supervisory constraints, which in turn encourage senior management to raise their green awareness. According to strategic choice theory, senior management is a key decision-maker in the strategic direction of a firm (Child, 1997). Green innovation requires significant resource investment and involves high market risks. Only when top management incorporates green innovation into the firm\u0026rsquo;s responsibilities will they allocate resources and elevate it to a strategic priority. Senior management\u0026rsquo;s green awareness is defined as their understanding of environmental and resource issues, which shapes their knowledge and perception of the resource environment. This includes factors such as the recognition of green competitive advantages, social responsibility awareness, and perceptions of external pressures (Chan et al., 2016). The stronger the green awareness of senior management, the greater their sense of responsibility to drive green innovation. As a result, they are more likely to allocate resources and capabilities to the field of green innovation, thereby promoting its development within the firm.\u003c/p\u003e\n\u003cp\u003eHigh-quality internal auditing can play a dual role in this process. On the one hand, it enhances the firm\u0026rsquo;s ability to identify and monitor environmental risks (DeSimone \u0026amp; Popoff, 2000), communicates environmental demands to senior management, and strengthens their green awareness. This enables the identification of potential benefits and market opportunities related to green innovation, and, in conjunction with the firm\u0026rsquo;s competitive advantages, helps determine the strategic direction. On the other hand, internal auditing functions as a supervisory and constraint mechanism, ensuring that senior management remains focused on the firm\u0026rsquo;s environmental responsibilities. It helps curb self-interested behaviors, shift managerial paradigms, and establish a management model centered on green manufacturing, green production, and green empowerment, thus cultivating a strong green image (Lin et al., 2013) and safeguarding the collective interests of stakeholders. Additionally, by providing high-quality environmental information disclosures and green data reports, internal auditing reduces information asymmetry, increases transparency, and further propels the development of green innovation. Based on the above reasoning, we propose the following hypothesis:\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eH2:\u0026nbsp;\u003c/strong\u003eInternal auditing promotes corporate green innovation by enhancing senior management\u0026rsquo;s green awareness.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003e2.4.3\u003c/strong\u003e\u003cstrong\u003e\u0026nbsp;\u003c/strong\u003e\u003cstrong\u003eMechanism of corporate risk tolerance\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eSecondly, internal auditing promotes green innovation by improving the quality of financial disclosures (Jaggi, 2023), reducing the negative consequences of information asymmetry (Narayanaswamy et al., 2019), and encouraging firms to increase their risk tolerance, thereby fostering green innovation. Risk tolerance reflects a firm\u0026apos;s willingness and inclination to incur costs in pursuit of high profits (Boubakri et al., 2013), representing the overall risk preferences and decision-making attitudes of corporate leaders. Compared to traditional innovation activities, green innovation is characterized by longer R\u0026amp;D cycles, higher resource requirements, and greater uncertainty, which results in a more substantial need for capital and a stronger reliance on external financing. Therefore, firms need to exhibit a higher level of risk tolerance in their investment decisions (Bargeron et al., 2010). According to risk management theory, managers typically tend to avoid risks for personal interests, opting to forego projects with positive net present values but higher risks that may result in performance uncertainty. This leads to short-termism in management decisions and the potential rejection of projects that could benefit the firm in the long run. However, shareholders, guided by the goal of long-term value maximization, may favour projects that support the firm\u0026rsquo;s future sustainable development, thus creating agency conflicts.\u0026nbsp;\u003c/p\u003e\n\u003cp\u003eHigh-quality internal auditing helps mitigate these conflicts by improving the quality of financial information (Jaggi, 2023), reducing information asymmetry, and alleviating agency problems between shareholders and management. Shareholders can leverage audited financial data to enhance their oversight of management, effectively curbing self-interested motivations and earnings manipulation (Brink et al., 2022), while reducing moral hazard. This process encourages management to adopt a higher level of risk tolerance. Furthermore, management can use the insights gained from high-quality internal auditing to better identify and manage risks and balance risks and rewards in decision-making. Managers are more likely to select higher-risk projects that advance green technological innovation, thereby promoting the firm\u0026rsquo;s long-term sustainable development. Based on this reasoning, we propose the following hypothesis:\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eH3:\u0026nbsp;\u003c/strong\u003eInternal auditing promotes corporate green innovation by enhancing the firm\u0026rsquo;s risk tolerance.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003e2.4.4\u003c/strong\u003e \u003cstrong\u003eMechanism of corporate financialization\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eFinally, internal auditing can promote green innovation by curbing corporate financialization. Financialization tends to enhance a firm\u0026rsquo;s short-term economic performance, whereas green technological innovation aligns more with long-term strategic goals. However, according to resource dependence theory, due to resource constraints, there is a competing resource allocation issue between financialization and green technological innovation. Excessive financialization increases a firm\u0026rsquo;s dependence on financial channels for profit, creating a \u0026quot;crowding-out effect\u0026quot; that diverts limited resources into financial assets. This reduces sustained investments in innovation, dampens technological innovation and undermines the firm\u0026rsquo;s ability to cultivate an environment conducive to innovation, thus restricting the development of its green innovation capabilities (Orhangazi, 2008).\u003c/p\u003e\n\u003cp\u003eAs a core supervisory tool in corporate governance, internal auditing can, to some extent, mitigate agency conflicts and reduce executives\u0026apos; incentives for \u0026quot;investment arbitrage\u0026quot; (Brink et al., 2022). By deterring self-serving and opportunistic behavior, internal auditing redirects management\u0026rsquo;s focus back to the firm\u0026rsquo;s core operations, reducing reliance on the returns from financial investments and increasing resource allocation toward green investments. This, in turn, fosters the continued development of the firm\u0026rsquo;s green innovation efforts. Based on this analysis, we propose the following hypothesis:\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eH4:\u003c/strong\u003e Internal auditing promotes corporate green innovation by curbing financialization.\u003c/p\u003e"},{"header":"3. Research design","content":"\u003cdiv id=\"Sec12\" class=\"Section2\"\u003e \u003ch2\u003e3.1 Sample and data\u003c/h2\u003e \u003cp\u003eSince China achieved international convergence of accounting standards in 2007, this study selects Chinese A-share listed companies on the Shanghai and Shenzhen stock exchanges from 2007 to 2022 as the research sample. Data on internal audit quality were manually collected from corporate annual reports, internal control evaluation reports, and internal audit policies. Green innovation data were obtained from the Chinese Research Data Services Platform (CNRDS), while additional sample data were sourced from the China Stock Market and Accounting Research (CSMAR) database.\u003c/p\u003e \u003cp\u003eThe following samples were excluded: (\u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e1\u003c/span\u003e) financial firms, due to their distinct asset structures and business models; (\u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2\u003c/span\u003e) companies with trading statuses marked as ST, *ST, or PT, given the heterogeneity of their financial conditions; and (\u003cspan citationid=\"CR3\" class=\"CitationRef\"\u003e3\u003c/span\u003e) firms with incomplete data. To mitigate the influence of outliers, all continuous variables were winsorized at the 1% and 99% levels. This process yielded a final sample of 17,303 valid observations.\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec13\" class=\"Section2\"\u003e \u003ch2\u003e3.2 Variables\u003c/h2\u003e \u003cdiv id=\"Sec14\" class=\"Section3\"\u003e \u003ch2\u003e3.2.1 Explained variable\u003c/h2\u003e \u003cp\u003eThis study follows the approach of Zhang et al. (2019) and uses the natural logarithm of the total number of practical green patent applications after adding 1 filed by the firm each year (LnGreen) as a proxy for corporate green innovation. The patent application data for invention and practical patents of listed companies are obtained from the China National Research Data Service Platform (CNRDS). Based on the green patent list of the World Intellectual Property Organization (WIPO) and matching the corresponding International Patent Classification (IPC) numbers, we identify and count the number of green patent applications filed by firms each year. For robustness checks, this study uses the natural logarithm of the total number of invention and practical green patents after adding 1 filed by the firm each year (LnGI) as an alternative variable. This allows for a comprehensive examination of the impact of internal auditing on different types of green innovation performance.\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec15\" class=\"Section3\"\u003e \u003ch2\u003e3.2.2 Interpreted variable\u003c/h2\u003e \u003cp\u003eAccording to the International Professional Practices Framework (IPPF), the standards for internal audit quality are primarily divided into three categories: Attribute Standards, Performance Standards, and Implementation Standards. The Attribute Standards focus on independence and competence, while the Performance and Implementation Standards pertain to specific aspects of audit quality control, including audit planning, audit scope, audit evidence, audit methodologies, and audit reporting. Building on the studies of Liu et al. (2024), Ismael and Kamel (2021), and Wei and Yuan (2014), this study uses a composite measurement of Internal Audit Quality (IAQ). This composite measure (on a 4-point scale) captures four distinct IAQ characteristics, each assigned 1 point:\u003c/p\u003e \u003cp\u003eIAModel: This measures the affiliation model of the internal audit department, reflecting its independence. When the internal audit department reports to both the board and management, the supervisory board, or the audit committee, IAModel is assigned a value of 1. If the internal audit department reports to management or the finance department, it is assigned a value of 0. The higher the level of the internal audit's affiliation within the organization, the stronger its independence, which allows the department to exercise its functions with greater authority and resources (Prawitt et al., 2009).\u003c/p\u003e \u003cp\u003eIADuty: This measures the competence of the internal audit department, reflecting the scope of its responsibilities. The internal audit's duties are categorized into three types: special audits, financial audits, and internal control evaluation and consulting. Each responsibility type is assigned a value of 1, and the total is divided by 3 to compute the IADuty score. The broader the scope of responsibilities, the more support and competence the internal audit department demonstrates, as the department is expected to receive managerial backing to function effectively (Al-Twaijry et al., 2003).\u003c/p\u003e \u003cp\u003eDual: This refers to whether the roles of Chairman and CEO are held by the same person, reflecting performance standards. The separation of powers between the chairman and the CEO is essential for effective internal auditing. When the roles are separate, Dual is assigned a value of 1; when combined, it is assigned a value of 0. Combining these roles leads to excessive centralization of power, which could hinder the board\u0026rsquo;s functions and, consequently, impair the effectiveness of the internal audit.\u003c/p\u003e \u003cp\u003eBig10: This refers to whether the company is audited by one of China\u0026rsquo;s top 10 audit firms, reflecting implementation standards. Internal and external audits complement each other (Knechel, 2007). High-quality external audits often correlate with more rigorous internal audit standards. Companies aiming for excellent corporate governance tend to hire top-tier external auditors, thereby setting a higher benchmark for their internal auditing systems (Goodwin-Stewart \u0026amp; Kent, 2006). If the company is audited by a Big 10 firm, Big10 is assigned a value of 1; otherwise, it is assigned 0.\u003c/p\u003e \u003cp\u003eInternal audit quality (IAQ) is calculated using the summation approach outlined in Model (\u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e1\u003c/span\u003e), where higher IAQ values indicate superior internal audit quality. Samples with missing data were excluded from the analysis.\u003cdiv id=\"Equ1\" class=\"Equation\"\u003e\u003cdiv format=\"TEX\" class=\"mathdisplay\" id=\"FileID_Equ1\" name=\"EquationSource\"\u003e\n$$\\:{IAQ}_{i,t}={IAModel}_{i,t}+{IADuty}_{i,t}+{Dual}_{i,t}+{Big10}_{i,t}$$\u003c/div\u003e\u003cdiv class=\"EquationNumber\"\u003e1\u003c/div\u003e\u003c/div\u003e\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec16\" class=\"Section3\"\u003e \u003ch2\u003e3.2.3 Control variables\u003c/h2\u003e \u003cp\u003eIn terms of control variables, this study draws on the research of Ege et al. (2020) and Zhang et al. (2020), and controls for several factors at the company, governance, and market levels. At the company level, the study controls for company size (Size), years since listing (ListAge), profitability (ROA), growth (Growth), and board characteristics (Board). At the governance level, it controls for ownership balance (Balance) and ownership concentration (Top10). At the market level, it controls for Tobin\u0026rsquo;s Q (TobinQ). Additionally, the study includes controls for year effects (YEAR) and industry effects (IND).\u003c/p\u003e \u003cp\u003eThe variable definitions are provided in Table\u0026nbsp;\u003cspan refid=\"Tab1\" class=\"InternalRef\"\u003e1\u003c/span\u003e.\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab1\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 1\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003e\u0026mdash;Variable definitions\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"3\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e \u003cp\u003eType\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eVariable\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003eDescription\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eExplained variable\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eLnGreen\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eNatural logarithm of the total number of practical green patent applications after adding 1\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eInterpreted variable\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eIAQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eLevel of internal auditing, calculated with reference to Liu et al.(2024), Ismael and Kamel (2021), Wei and Yuan (2014)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\" morerows=\"9\" rowspan=\"10\"\u003e \u003cp\u003eControl variables\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eSize\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eFirm size, calculated as ln (Total assets)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eGrowth\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eChange in operating income for the current period/operating income for the previous period\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eROA\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eReturn on assets, calculated as Net profit / Total assets\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eBoard\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eBoard size, calculated as ln(Number of directors)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eTobinQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eTotal market value/replacement cost of assets\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eTop10\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eThe sum of the shareholding ratio of the top 10 shareholders\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eBalance\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eThe second largest shareholder's shareholding ratio / the largest shareholder's shareholding ratio\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eListAge\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eLn (Current year-listed year\u0026thinsp;+\u0026thinsp;1)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eYear\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eYear dummy variables\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eInd\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eIndustry dummy variables\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003c/div\u003e \u003c/div\u003e \u003cdiv id=\"Sec17\" class=\"Section2\"\u003e \u003ch2\u003e3.3 Model specification\u003c/h2\u003e \u003cp\u003eTo examine the impact of internal auditing on corporate green innovation performance, the following model was developed based on the following considerations: First, the Ordinary Least Squares (OLS) model imposes relatively few restrictions, making it effective in establishing the relationship between explanatory and dependent variables. Second, key factors influencing corporate green innovation, as identified in prior literature, were incorporated into the model to minimize confounding effects and enhance result robustness. Third, the model controls for year and industry fixed effects to account for characteristics that remain constant over time or across industries, thus mitigating potential biases. The specific model is as follows:\u003cdiv id=\"Equ2\" class=\"Equation\"\u003e\u003cdiv format=\"TEX\" class=\"mathdisplay\" id=\"FileID_Equ2\" name=\"EquationSource\"\u003e\n$$\\:\\:\\:{LnGreen}_{i,t}={{\\alpha\\:}}_{0}+{{\\alpha\\:}}_{1}{IAQ}_{\\text{i},\\text{t}}+\\sum\\:{Control}_{i,t}+{{\\alpha\\:}}_{2}\\text{Y}\\text{E}\\text{A}\\text{R}+{{\\alpha\\:}}_{3}\\text{I}\\text{N}\\text{D}+{{\\epsilon\\:}}_{i,t}$$\u003c/div\u003e\u003cdiv class=\"EquationNumber\"\u003e2\u003c/div\u003e\u003c/div\u003e\u003c/p\u003e \u003cp\u003eAmong them, LnGreen is the proxy variable of green innovation, IAQ measures the internal auditing level of listed companies, \u0026sum;Control represents the control variable, YEAR and IND are year fixed effects and industry fixed effects. To prevent heteroscedasticity and sequence correlation problems in the process of OLS regression from affecting the conclusion, the standard errors of regression coefficients in this paper all use P-values.\u003c/p\u003e \u003c/div\u003e"},{"header":"4. Empirical results","content":"\u003cdiv id=\"Sec19\" class=\"Section2\"\u003e \u003ch2\u003e4.1 Descriptive statistics\u003c/h2\u003e \u003cp\u003eTable\u0026nbsp;\u003cspan refid=\"Tab2\" class=\"InternalRef\"\u003e2\u003c/span\u003e shows the descriptive statistical results of the main variables. First, the minimum value of the explained variable LnGreen is 0 and the maximum value is 5.892, indicating that there is a large difference between the green innovation capabilities of the sample companies. Meanwhile, the average value of LnGreen is 0.515, indicating that the green innovation performance of most sample companies is low and there is still a large room for improvement. Second, explanatory variable IAQ fluctuates between 0.33 and 4, with a variance of 0.794, reflecting large differences in the internal auditing level of sample companies. Third, the descriptive statistical characteristics of the relevant control variables are basically consistent with those of the references. The above features provide an effective sample basis for further research.\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab2\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 2\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003e\u0026mdash;Variable descriptive statistics\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"6\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c4\" colnum=\"4\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c5\" colnum=\"5\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c6\" colnum=\"6\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e \u003cp\u003eVariable\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eObs\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003eMean\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003eStd.Dev.\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c5\"\u003e \u003cp\u003eMin\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c6\"\u003e \u003cp\u003eMax\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eLnGreen\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e17303\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.515\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.868\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e5.892\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eIAQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e17303\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e2.776\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.794\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0.333\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e4\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eSize\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e17303\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e22.431\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e1.296\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e19.406\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e26.452\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eGrowth\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e17303\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.146\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.392\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-0.653\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e3.894\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eROA\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e17303\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.036\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.063\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e\u0026minus;\u0026thinsp;.382\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e0.255\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eBoard\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e17303\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e2.159\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.2\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e1.609\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e2.708\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eTobinQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e17303\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e2.011\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e1.331\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0.802\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e16.647\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eTop10\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e17303\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.54\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.152\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0.208\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e0.91\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eBalance\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e17303\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.323\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.289\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0.005\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e1\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eListAge\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e17303\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e2.539\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.464\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e1.386\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e3.401\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec20\" class=\"Section2\"\u003e \u003ch2\u003e4.2 The impact of internal auditing on corporate green innovation\u003c/h2\u003e \u003cp\u003eTable\u0026nbsp;\u003cspan refid=\"Tab3\" class=\"InternalRef\"\u003e3\u003c/span\u003e reports the regression results of the impact of internal auditing on green innovation. Column (\u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e1\u003c/span\u003e) is the regression result that only includes the year fixed effect, and the coefficient of LnGreen is 0.0726, showing a significant positive correlation at the 1% level. Column (\u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2\u003c/span\u003e) shows the fixed-effect regression results including year and industry, and the LnGreen coefficient is 0.0627, which has significant statistical significance at 1% level. Column (\u003cspan citationid=\"CR3\" class=\"CitationRef\"\u003e3\u003c/span\u003e) shows the regression results of all control variables and industry clustering, and the LnGreen coefficient is 0.0627, showing a significant positive correlation at the 1% level. The results show that internal audit can improve enterprises' green innovation. This result tentatively confirms hypothesis H1.\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab3\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 3\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003e\u0026mdash;Regression Analysis Results\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"4\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c4\" colnum=\"4\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\" morerows=\"1\" rowspan=\"2\"\u003e \u003cp\u003eVariable\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(\u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e1\u003c/span\u003e)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(\u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2\u003c/span\u003e)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(\u003cspan citationid=\"CR3\" class=\"CitationRef\"\u003e3\u003c/span\u003e)\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eLnGreen\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003eLnGreen\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003eLnGreen\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eIAQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.0726\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.0627\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.0627\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0047)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eSize\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.3045\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.3007\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.3007\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0005)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eGrowth\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-0.0012\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.0128\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-0.0128\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.9417)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.3845)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.3872)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eROA\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-0.2815\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.1936\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-0.1936\u003csup\u003e*\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0055)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0426)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0959)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eBoard\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.0063\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.0184\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-0.0184\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.8401)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.5291)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.7927)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eTobinQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.0341\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.0292\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.0292\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.1307)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eTop10\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-0.4463\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.3043\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-0.3043\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0209)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eBalance\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.0061\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.0054\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-0.0054\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.7687)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.7802)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.8816)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eListAge\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-0.2034\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.0756\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-0.0756\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0176)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eConstant\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-5.8338\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-6.0578\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-6.0578\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0008)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eYear FE\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eIndustry FE\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eN\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eIndustry Cluster\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eN\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eN\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eObservations\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e17303\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e17303\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e17303\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cem\u003eAdj.R\u003c/em\u003e\u003csup\u003e2\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.211\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.318\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.318\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003e \u003cem\u003ep\u003c/em\u003e-values in parentheses \u003csup\u003e*\u003c/sup\u003e \u003cem\u003ep\u003c/em\u003e\u0026thinsp;\u0026lt;\u0026thinsp;0.10, \u003csup\u003e**\u003c/sup\u003e \u003cem\u003ep\u003c/em\u003e\u0026thinsp;\u0026lt;\u0026thinsp;0.05, \u003csup\u003e***\u003c/sup\u003e \u003cem\u003ep\u003c/em\u003e\u0026thinsp;\u0026lt;\u0026thinsp;0.01\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec21\" class=\"Section2\"\u003e \u003ch2\u003e4.3 Robustness tests and addressing endogeneity\u003c/h2\u003e \u003cdiv id=\"Sec22\" class=\"Section3\"\u003e \u003ch2\u003e4.3.1 Robustness tests\u003c/h2\u003e \u003c/div\u003e \u003c/div\u003e\n\u003ch3\u003e1. Changing the independent variable\u003c/h3\u003e\n\u003cp\u003eReplace the above green innovation measurement indicators and select the natural logarithm of the total number of invention and practical green patents after adding 1 filed by the firm each year as the alternative variable for testing. The regression results in column (\u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e1\u003c/span\u003e) of Table\u0026nbsp;\u003cspan refid=\"Tab4\" class=\"InternalRef\"\u003e4\u003c/span\u003e show that the coefficient of IAQ, the core explanatory variable, is significantly positive at the 5% level, and the benchmark regression results are still robust.\u003c/p\u003e\n\u003ch3\u003e2. Changing the dependent variable\u003c/h3\u003e\n\u003cp\u003eThe internal auditing level is regrouped by the annual industry median and variable IAQ1 is defined. Sample IAQ1 greater than or equal to the median is assigned 1, otherwise assigned 0. Return to IAQ with IAQ1. The regression results in column (\u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2\u003c/span\u003e) of Table\u0026nbsp;\u003cspan refid=\"Tab4\" class=\"InternalRef\"\u003e4\u003c/span\u003e show that the coefficient of variable IAQ1 is significantly positive at the level of 1%, and the benchmark regression results are still robust.\u003c/p\u003e\n\u003ch3\u003e3. Using industry and year bidirectional clustering standard error\u003c/h3\u003e\n\u003cp\u003eThe standard error in bidirectional clustering can better control the influence of individual and time effects on the estimation results and provide information about the accuracy and reliability of the clustering. Therefore, to obtain more robust regression results, we re-regressed Model (\u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e1\u003c/span\u003e) using bidirectional clustering standard error at the industry and year levels. The regression results of column (\u003cspan citationid=\"CR3\" class=\"CitationRef\"\u003e3\u003c/span\u003e) in Table\u0026nbsp;\u003cspan refid=\"Tab4\" class=\"InternalRef\"\u003e4\u003c/span\u003e show that the coefficient of IAQ is still significantly positive at the level of 1%, and the benchmark regression results are still robust.\u003c/p\u003e\n\u003ch3\u003e4. Cluster analysis based on individual company level\u003c/h3\u003e\n\u003cp\u003eIn the basic regression, we adopted industry-level cluster analysis. To avoid the interference of company-level factors on the research results, we further adopted company-level cluster analysis to conduct robustness test. The specific results are shown in column (\u003cspan citationid=\"CR4\" class=\"CitationRef\"\u003e4\u003c/span\u003e) of Table\u0026nbsp;\u003cspan refid=\"Tab4\" class=\"InternalRef\"\u003e4\u003c/span\u003e. The results show that the coefficient of variable IAQ is significantly positive at the 1% level, indicating that internal audit and green innovation still show a significant positive correlation based on the company-level cluster analysis, thus further verifying the robustness of the basic regression results.\u003c/p\u003e\n\u003ch3\u003e5. Lagged Regression Analysis of Explanatory Variables\u003c/h3\u003e\n\u003cp\u003eConsidering the time lag between R\u0026amp;D activities and patent applications, we used the lagged dependent variable F.LnGreen to re-estimate Model (\u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2\u003c/span\u003e). The results, presented in Table\u0026nbsp;\u003cspan refid=\"Tab4\" class=\"InternalRef\"\u003e4\u003c/span\u003e, column (\u003cspan citationid=\"CR5\" class=\"CitationRef\"\u003e5\u003c/span\u003e), indicate that IAQ remains positively significant at the 1% level, further validating the positive impact of internal auditing on green innovation.\u003c/p\u003e\n\u003ch3\u003e6. Change the sample scope\u003c/h3\u003e\n\u003cp\u003eDue to the global outbreak of COVID-19 in 2020, enterprises are faced with many difficulties such as delayed resumption of work, broken capital chain, and decreased R\u0026amp;D investment. To avoid the interference of this unexpected event on the research results, this paper excludes samples from 2020, 2021 and 2022 and conducts a robustness test. The specific results are shown in column (\u003cspan citationid=\"CR6\" class=\"CitationRef\"\u003e6\u003c/span\u003e) of Table\u0026nbsp;\u003cspan refid=\"Tab4\" class=\"InternalRef\"\u003e4\u003c/span\u003e. The results show that the coefficient of IAQ is still significantly positive at 1% level, and the benchmark regression results are still robust.\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab4\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 4\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003e\u0026mdash;Robustness tests results\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"7\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c4\" colnum=\"4\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c5\" colnum=\"5\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c6\" colnum=\"6\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c7\" colnum=\"7\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\" morerows=\"1\" rowspan=\"2\"\u003e \u003cp\u003eVariable\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(\u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e1\u003c/span\u003e)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(\u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2\u003c/span\u003e)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(\u003cspan citationid=\"CR3\" class=\"CitationRef\"\u003e3\u003c/span\u003e)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(\u003cspan citationid=\"CR4\" 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\u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0042)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0205)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0263)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0005)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e(0.0180)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e(0.0119)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eBalance\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.0163\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.0054\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-0.0054\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-0.0054\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e-0.0170\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e-0.0000\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.6900)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.8828)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.8816)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.8902)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e(0.6276)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e(0.9994)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eListAge\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-0.0719\u003csup\u003e*\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.0755\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-0.0756\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-0.0756\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e-0.0688\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e-0.0833\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0923)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0177)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0156)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0123)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e(0.0263)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e(0.0074)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eConstant\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-8.7669\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-6.0486\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-6.0578\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-6.0578\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e-6.1847\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e-5.4870\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0002)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0009)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0015)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e(0.0011)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e(0.0019)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eYear FE\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eIndustry FE\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eObservations\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e17303\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e17303\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e17303\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e17303\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e14102\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e13106\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cem\u003eAdj.R\u003c/em\u003e\u003csup\u003e2\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.357\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.318\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.318\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0.318\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e0.310\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e0.293\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003e \u003cem\u003ep\u003c/em\u003e-values in parentheses \u003csup\u003e*\u003c/sup\u003e \u003cem\u003ep\u003c/em\u003e\u0026thinsp;\u0026lt;\u0026thinsp;0.10, \u003csup\u003e**\u003c/sup\u003e \u003cem\u003ep\u003c/em\u003e\u0026thinsp;\u0026lt;\u0026thinsp;0.05, \u003csup\u003e***\u003c/sup\u003e \u003cem\u003ep\u003c/em\u003e\u0026thinsp;\u0026lt;\u0026thinsp;0.01\u003c/p\u003e \u003cdiv id=\"Sec29\" class=\"Section2\"\u003e \u003ch2\u003e4.3.2 Addressing endogeneity\u003c/h2\u003e \u003c/div\u003e\n\u003ch3\u003e1. PSM\u003c/h3\u003e\n\u003cp\u003eThis study may also have endogenous problems caused by data bias and confounding factors, so propensity score matching (PSM) was used to correct them. In this paper, IAQ is divided into high and low groups based on the annual industry median, and the dummy variable IAQ1 is set accordingly. IAQ1 above the median is assigned a value of 1, otherwise 0. Then IAQ1 was used to perform Logistic regression on all control variables to obtain the scores of each observed value. Based on this score, the regression of model (\u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2\u003c/span\u003e) was performed by means of nearest neighbour matching (1:3), radius matching (0.01) and kernel matching, respectively. The ATT of the three matching methods passed the test and passed the balance test.\u003c/p\u003e \u003cp\u003eColumn (\u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e1\u003c/span\u003e)\u0026ndash;(\u003cspan citationid=\"CR3\" class=\"CitationRef\"\u003e3\u003c/span\u003e) of Table\u0026nbsp;\u003cspan refid=\"Tab5\" class=\"InternalRef\"\u003e5\u003c/span\u003e list the regression results after PSM. In Table\u0026nbsp;\u003cspan refid=\"Tab5\" class=\"InternalRef\"\u003e5\u003c/span\u003e, column (\u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e1\u003c/span\u003e) is the regression result of nearest neighbour matching (1:3), column (\u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2\u003c/span\u003e) is the regression result of radius matching (0.01), and column (\u003cspan citationid=\"CR3\" class=\"CitationRef\"\u003e3\u003c/span\u003e) is the regression result of kernel matching. The coefficients of IAQ were all significantly positive at the level of 1%, indicating that the study conclusion was robust after controlling endogeneity.\u003c/p\u003e\n\u003ch3\u003e2. 2SLS\u003c/h3\u003e\n\u003cp\u003eTo alleviate the possible endogenous problem of mutual causation between corporate green innovation and internal auditing, that is, the company with strong green innovation ability has better quality and can effectively improve the internal audit level, this paper adopts the two-stage least square method to deal with it. In the first stage, we adopted the annual IAQ industry mean excluding the target enterprise as the instrumental variable IV and used IV to perform regression on the endogenous variables to obtain the predicted value P_IAQ, as shown in column (\u003cspan citationid=\"CR4\" class=\"CitationRef\"\u003e4\u003c/span\u003e) of Table\u0026nbsp;\u003cspan refid=\"Tab5\" class=\"InternalRef\"\u003e5\u003c/span\u003e. In the second stage, P_IAQ was used as an independent variable to perform regression on model (\u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e1\u003c/span\u003e), as shown in column (\u003cspan citationid=\"CR5\" class=\"CitationRef\"\u003e5\u003c/span\u003e) of Table\u0026nbsp;\u003cspan refid=\"Tab5\" class=\"InternalRef\"\u003e5\u003c/span\u003e. The coefficient of P_IAQ is still significantly positive, and the benchmark regression results still support H1.\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab5\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 5\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003e\u0026mdash;Endogeneity tests\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"6\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c4\" colnum=\"4\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c5\" colnum=\"5\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c6\" colnum=\"6\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\" morerows=\"1\" rowspan=\"2\"\u003e \u003cp\u003eVariable\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(\u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e1\u003c/span\u003e)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(\u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2\u003c/span\u003e)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(\u003cspan citationid=\"CR3\" class=\"CitationRef\"\u003e3\u003c/span\u003e)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(\u003cspan citationid=\"CR4\" class=\"CitationRef\"\u003e4\u003c/span\u003e)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c6\"\u003e \u003cp\u003e(\u003cspan citationid=\"CR5\" class=\"CitationRef\"\u003e5\u003c/span\u003e)\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eLnGreen\u003c/p\u003e \u003cp\u003e(Nearest Neighbor Matching)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003eLnGreen\u003c/p\u003e \u003cp\u003e(Radius Matching)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003eLnGreen\u003c/p\u003e \u003cp\u003e(Kernel Matching)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c5\"\u003e \u003cp\u003eLnGreen\u003c/p\u003e \u003cp\u003e(IV-first stage)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c6\"\u003e \u003cp\u003eLnGreen\u003c/p\u003e \u003cp\u003e(IV-second stage)\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eIAQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.054\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.051\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.051\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eIV\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0.5743\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eP_IAQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e 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\u003cp\u003e-0.196\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.177\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-0.176\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-0.6161\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e-0.0967\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.032)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.041)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.043)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e(0.3805)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eBoard\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.018\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.026\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.027\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-0.1418\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e0.0173\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.573)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.380)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.363)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e(0.7853)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eTobinQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.034\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.035\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.034\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0.0339\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e0.0220\u003csup\u003e*\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e(0.0936)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eTop10\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-0.204\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.200\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-0.199\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-0.3821\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e-0.2210\u003csup\u003e*\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e 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\u003cp\u003e-6.411\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-6.407\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-8.0676\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e-5.0239\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e(0.0006)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eYear FE\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eIndustry FE\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eObservations\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e15,712\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e17,284\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e17,303\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e17302\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e17295\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cem\u003eAdj.R\u003c/em\u003e\u003csup\u003e2\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.361\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.364\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.364\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e.\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e0.373\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003e \u003cem\u003ep\u003c/em\u003e-values in parentheses \u003csup\u003e*\u003c/sup\u003e \u003cem\u003ep\u003c/em\u003e\u0026thinsp;\u0026lt;\u0026thinsp;0.10, \u003csup\u003e**\u003c/sup\u003e \u003cem\u003ep\u003c/em\u003e\u0026thinsp;\u0026lt;\u0026thinsp;0.05, \u003csup\u003e***\u003c/sup\u003e \u003cem\u003ep\u003c/em\u003e\u0026thinsp;\u0026lt;\u0026thinsp;0.01\u003c/p\u003e \u003cdiv id=\"Sec32\" class=\"Section2\"\u003e \u003ch2\u003e4.4 Mechanism test\u003c/h2\u003e \u003cp\u003eTo alleviate the possible endogenous problem of mutual causality between enterprise green innovation and internal auditing, that is, companies with strong green innovation capabilities are of better quality and can effectively improve the level of internal auditing, this paper uses the two-stage least squares method to deal with it. Therefore, we conducted an analysis of the intermediary effect based on the study of Jiang (2022) to test whether it is a channel for internal auditing to influence green innovation.\u003c/p\u003e \u003cdiv id=\"Sec33\" class=\"Section3\"\u003e \u003ch2\u003e4.4.1 Executive green awareness\u003c/h2\u003e \u003cp\u003eText analysis has been shown to be an effective method for assessing executive green awareness, particularly in longitudinal studies (Duriau et al., 2000). In this study, we apply a text analysis approach focusing on three dimensions: green competitive advantage, corporate social responsibility, and external environmental pressure. A series of keywords, such as \"energy conservation,\" \"environmental strategy,\" \"environmental philosophy,\" \"environmental management institutions,\" \"environmental education,\" \"environmental training,\" \"environmental technology development,\" \"environmental auditing,\" \"low-carbon practices,\" \"environmental policies,\" \"environmental departments,\" \"environmental inspections,\" \"environmental governance,\" and \"environmental pollution control,\" were selected. These terms were used to measure executive green awareness by analyzing their frequency of appearance in the annual reports of listed companies from 2007 to 2022.\u003c/p\u003e \u003cp\u003eAs shown in column (\u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e1\u003c/span\u003e) of Table\u0026nbsp;\u003cspan refid=\"Tab6\" class=\"InternalRef\"\u003e6\u003c/span\u003e, the regression results indicate that IAQ is significantly positively associated with executive green awareness at the 1% level. This finding suggests that internal auditing quality is strongly correlated with higher levels of executive green awareness. Furthermore, the results confirm that executive green awareness acts as a positive mechanism in the relationship between internal auditing and green innovation, supporting Hypothesis 2.\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec34\" class=\"Section3\"\u003e \u003ch2\u003e4.4.2 Corporate risk tolerance\u003c/h2\u003e \u003cp\u003eHigher risk tolerance means increased uncertainty in future cash flows, and earnings volatility is the most widely used measure of risk tolerance. Therefore, this study primarily uses Return on Assets (ROA) during the observation period (measured as EBITDA divided by total assets at year-end). Based on the research of John et al. (2008) and Yu et al. (2013), the formula (\u003cspan citationid=\"CR3\" class=\"CitationRef\"\u003e3\u003c/span\u003e) is used to subtract the industry average ROA for the year to obtain ADJ_ROA to alleviate industry and cyclical effects. Given the large number of manufacturing listed companies in China, which account for over 70% of the total sample, the industry classification for manufacturing companies is refined to two-digit codes, and samples where only one company exists in the industry are excluded. The calculation method in formula (\u003cspan citationid=\"CR4\" class=\"CitationRef\"\u003e4\u003c/span\u003e) is used, with each observation period spanning five years (from t-2 to t\u0026thinsp;+\u0026thinsp;2). The standard deviation and range of the industry-adjusted ROA (Adj_ROA) are calculated to obtain two indicators: Risk1 and Risk2, which measure corporate risk tolerance. The larger the values of Risk1 and Risk2, the greater the earnings volatility, indicating a higher level of corporate risk tolerance.\u003c/p\u003e \u003cp\u003eThe regression results are shown in Table\u0026nbsp;\u003cspan refid=\"Tab6\" class=\"InternalRef\"\u003e6\u003c/span\u003e: Columns (\u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2\u003c/span\u003e) and (\u003cspan citationid=\"CR3\" class=\"CitationRef\"\u003e3\u003c/span\u003e) indicate that whether using standard deviation (Risk1) or range (Risk2) as the measure, the IAQ coefficient is significantly positive at the 5% statistical level, with values of 0.0008 and 0.0017, respectively. This suggests that internal audit is positively related to corporate risk tolerance, and internal audit can enhance corporate green innovation performance by improving the level risk tolerance. Hypothesis H3 is supported.\u003c/p\u003e\u003cp\u003e\u003cimg 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\" style=\"width: 441px; height: 124.557px;\" width=\"441\" height=\"124.557\"\u003e\u003c/p\u003e \u003cp\u003e(Here, \u003cem\u003ei\u003c/em\u003e represents a firm, and \u003cem\u003en\u003c/em\u003e denotes the year within the observation window, taking values from 1 to 5. \u003cem\u003eX\u003c/em\u003e refers to the total number of firms in a specific industry, while \u003cem\u003ek\u003c/em\u003e represents the \u003cem\u003ek\u003c/em\u003e-th firm within that industry.)\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec35\" class=\"Section3\"\u003e \u003ch2\u003e4.4.3 Corporate financialization\u003c/h2\u003e \u003cp\u003eThis study defines corporate financialization as the ratio of financial assets to total assets. Referring to the works of Demir (2009) and Du et al. (2019), we calculate the level of corporate financialization (FINRATIO) using the formula FIN\u0026thinsp;=\u0026thinsp;FA / TA, where FA represents financial assets, which include trading financial assets, derivative financial assets, loans and advances (net), available-for-sale financial assets (net), held-to-maturity investments (net), and investment properties (net). TA represents the average value of total assets at the beginning and end of the year. Additionally, after 2018, accounting standards adjusted the classification of financial assets. Held-to-maturity investments were reclassified as bond investments, and available-for-sale financial assets were reclassified as other debt investments and other equity investments. Therefore, FA now includes trading financial assets, derivative financial assets, loans and advances (net), other debt investments and other equity investments (net), bond investments (net), and investment properties (net).\u003c/p\u003e \u003cp\u003eAccording to column (\u003cspan citationid=\"CR4\" class=\"CitationRef\"\u003e4\u003c/span\u003e) in Table\u0026nbsp;\u003cspan refid=\"Tab6\" class=\"InternalRef\"\u003e6\u003c/span\u003e, the coefficient of IAQ is significantly negative at the 1% level, with a value of -0.0029, indicating that internal audit is significantly negatively correlated with corporate financialization. Based on the mediation effect, the improvement in internal audit quality can promote green innovation development by suppressing corporate financialization. The results support H4.\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab6\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 6\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003e\u0026mdash;Mechanism test\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"5\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c4\" colnum=\"4\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c5\" colnum=\"5\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\" morerows=\"1\" rowspan=\"2\"\u003e \u003cp\u003eVariable\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(\u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e1\u003c/span\u003e)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(\u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2\u003c/span\u003e)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(\u003cspan citationid=\"CR3\" class=\"CitationRef\"\u003e3\u003c/span\u003e)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(\u003cspan citationid=\"CR4\" class=\"CitationRef\"\u003e4\u003c/span\u003e)\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eExecutive green Cognition\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003eRisk 1\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003eRisk 2\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c5\"\u003e \u003cp\u003eFINRATIO\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eIAQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.1250\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.0008\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.0017\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-0.0029\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0125)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0130)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0250)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0002)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eSize\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.5041\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.0022\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-0.0055\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-0.0078\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eGrowth\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-0.0004\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.0026\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.0057\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-0.0077\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.9970)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0001)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0004)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eROA\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-1.4770\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.1541\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-0.3585\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0.0875\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0276)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eBoard\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.6276\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.0081\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-0.0206\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-0.0182\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0026)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eTobinQ\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-0.2574\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.0039\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.0092\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-0.0020\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0004)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eTop10\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.6599\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.0053\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-0.0128\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-0.0084\u003csup\u003e*\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0240)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0052)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0046)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0669)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eBalance\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-0.5177\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.0085\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.0203\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-0.0015\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0002)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.4935)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eListAge\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-0.3068\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.0013\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-0.0028\u003csup\u003e*\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0.0194\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0029)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0330)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0650)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eConstant\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-9.0489\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.1007\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.2482\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0.2276\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eYear FE\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eIndustry FE\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eObservations\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e14815\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e14255\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e14255\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e17303\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cem\u003eAdj.R\u003c/em\u003e\u003csup\u003e2\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.151\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.185\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.182\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0.148\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003e \u003cem\u003ep\u003c/em\u003e-values in parentheses \u003csup\u003e*\u003c/sup\u003e \u003cem\u003ep\u003c/em\u003e\u0026thinsp;\u0026lt;\u0026thinsp;0.10, \u003csup\u003e**\u003c/sup\u003e \u003cem\u003ep\u003c/em\u003e\u0026thinsp;\u0026lt;\u0026thinsp;0.05, \u003csup\u003e***\u003c/sup\u003e \u003cem\u003ep\u003c/em\u003e\u0026thinsp;\u0026lt;\u0026thinsp;0.01\u003c/p\u003e \u003c/div\u003e \u003c/div\u003e"},{"header":"5. Further analysis","content":"\u003cdiv id=\"Sec37\" class=\"Section2\"\u003e \u003ch2\u003e5.1 Moderating Role of Internal Control\u003c/h2\u003e \u003cp\u003eWang et al. (2022) argue that a robust internal control environment promotes green innovation by mitigating risks, resolving agency conflicts, alleviating financing constraints, and enhancing the rationality of innovation investments. Similarly, Ma et al. (2022) demonstrates that strengthening internal control mechanisms improves operational efficiency, reduces financialization, and provides the necessary resources for innovation activities. This lowers the uncertainties associated with green innovation risks and drives green investments. The pathways through which internal control facilitates green innovation are thus comparable to those of internal auditing. A high-quality internal control environment reduces innovation risks and incentivizes greater investments in green innovation. Given the synergistic and interactive relationship between internal auditing and internal control (Vijayakumar \u0026amp; Nagaraja, 2012), the effectiveness of internal auditing in enhancing green innovation is amplified in the presence of high-quality internal control.\u003c/p\u003e \u003cp\u003eTo test the moderating role of internal control, we used the DIB Internal Control Index (Quintile), where higher scores indicate better internal control quality. The index assigns values of 8, 7, 6, 5, 4, 3, 2, and 1 to ratings of AAA, AA, A, BBB, BB, B, C, and D, respectively. We introduced an interaction term, Quintile \u0026times; IAQ, into Model (\u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2\u003c/span\u003e). As shown in Table\u0026nbsp;\u003cspan refid=\"Tab7\" class=\"InternalRef\"\u003e7\u003c/span\u003e, column (\u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e1\u003c/span\u003e), the coefficient of the interaction term is significantly positive, indicating that high internal control quality strengthens the positive relationship between internal auditing and green innovation.\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec38\" class=\"Section2\"\u003e \u003ch2\u003e5.2 Moderating Role of Ownership Structure\u003c/h2\u003e \u003cp\u003eState-owned enterprises (SOEs) are an important pillar of China's national economy, and their development is directly related to the high-quality growth of the social economy. As the country places more emphasis on the environmental benefits of businesses, SOEs have been leading the way in responding to environmental issues and are taking a leadership role in green innovation (Gao et al., 2021). Furthermore, SOEs have significant policy advantages compared to non-state-owned enterprises. As companies established or partially owned by the government, SOEs have easier access to tax incentives, government subsidies, and multiple financing channels with lower financing costs, which allows them to overcome the financing constraints of green innovation. Additionally, SOEs generally have a higher risk-bearing capacity. However, due to the rigid management mechanisms in place within SOEs, they tend to face issues such as a lack of innovation, insufficient R\u0026amp;D investment, and inadequate supervision, which are not conducive to green innovation.\u003c/p\u003e \u003cp\u003eTherefore, to examine the differences in the impact of internal auditing on green innovation based on ownership nature, we categorize the sample companies into state-owned and non-state-owned enterprises. We then add the interaction term SOE\u0026times;IAQ in model (\u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2\u003c/span\u003e) for regression. Column (\u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2\u003c/span\u003e) in Table\u0026nbsp;\u003cspan refid=\"Tab7\" class=\"InternalRef\"\u003e7\u003c/span\u003e shows that both internal auditing and ownership nature are positively correlated with green innovation. However, the interaction term SOE\u0026times;IAQ is negatively correlated with green innovation at the 10% statistical level. This result suggests that internal audit has a more pronounced positive effect on green innovation in non-state-owned enterprises, which tend to face more intense market competition and financing constraints. In contrast to the resource advantages of SOEs, non-state-owned enterprises often need higher green awareness and greater efforts in green technological innovation to acquire the resources needed for innovation, reduce financialization, and enhance resource utilization efficiency and competitiveness for sustainable development.\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec39\" class=\"Section2\"\u003e \u003ch2\u003e5.3 Moderating Role of firm size\u003c/h2\u003e \u003cp\u003eFirm size significantly influences management practices, development strategies, R\u0026amp;D capabilities, and profitability. Larger firms often face declining managerial efficiency and diminishing returns to scale, necessitating green innovation to optimize resource utilization and production efficiency. Additionally, as firm size increases, so does information asymmetry, which heightens the need for high-quality internal auditing with elevated reporting levels (Wu, 2022). Larger firms also benefit from superior financial resources, advanced technological infrastructure, and an ample pool of R\u0026amp;D personnel. Combined with progressive managerial thinking and higher green awareness, these factors enhance their capacity to undertake green innovation activities, thereby improving innovation efficiency. Conversely, many small and medium-sized enterprises (SMEs) are characterized by unified ownership and management, where control and ownership rights are concentrated in a single individual. This lack of separation often leads to self-serving managerial behaviors, prioritizing short-term financial gains over long-term green innovation. Furthermore, SMEs frequently lack sufficient financial expertise and fail to establish robust internal audit systems. Their internal audit functions are often poorly structured, with narrowly defined responsibilities, simplistic methods, and superficial execution, limiting their ability to support green innovation.\u003c/p\u003e \u003cp\u003eTo investigate the moderating effect of firm size, we introduced an interaction term, Scale \u0026times; IAQ, into Model (\u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2\u003c/span\u003e). The results, presented in Table\u0026nbsp;\u003cspan refid=\"Tab7\" class=\"InternalRef\"\u003e7\u003c/span\u003e, column (\u003cspan citationid=\"CR3\" class=\"CitationRef\"\u003e3\u003c/span\u003e), show that the coefficient of the interaction term is significantly positive. This indicates that firm size amplifies the positive relationship between internal auditing and green innovation. Larger firms are better positioned to leverage internal auditing to enhance governance, mitigate risks, and allocate resources effectively, thereby fostering green innovation.\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec40\" class=\"Section2\"\u003e \u003ch2\u003e5.4 Moderating Role of Analyst Attention\u003c/h2\u003e \u003cp\u003eAs an important mechanism to reduce information asymmetry and agency costs, the role of securities analysts has permeated many economic activities. Research shows that securities analysts impact the efficiency of capital markets by increasing the information available to investors, improving corporate information disclosure quality, and significantly enhancing the efficiency of market resource allocation (Lys \u0026amp; Sohn, 1990). Moreover, studies have shown that analyst coverage significantly boosts a company's innovation performance, as evidenced by a notable increase in patent outputs. Unlike corporate managers, analysts are independent third-party intermediaries who can more objectively and impartially communicate known information to investors. By helping investors better understand the value of corporate innovation activities, analysts prevent the undervaluation of innovative firms, thereby enhancing managers' willingness to invest in innovation (Manso, 2011) and increasing executives' green awareness. This helps firms allocate resources for green innovation, reduce financialization, and ensure the availability of resources.\u003c/p\u003e \u003cp\u003eTherefore, to examine the moderating effect of analyst attention on the relationship between internal audit and green innovation, we use the number of research reports on the same listed company (ReportAttention) as a measure of analyst attention. We then add the interaction term ReportAttention\u0026times;IAQ in model (\u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2\u003c/span\u003e) for regression. The results in column (\u003cspan citationid=\"CR4\" class=\"CitationRef\"\u003e4\u003c/span\u003e) of Table\u0026nbsp;\u003cspan refid=\"Tab7\" class=\"InternalRef\"\u003e7\u003c/span\u003e show that the coefficient of the interaction term is significantly positive at the 5% statistical level, indicating that the higher the analyst attention, the stronger the positive relationship between internal audit and green innovation. Analyst attention increases executives' green awareness and promotes enterprises to achieve the sustainable development between business growth and the environment stewardship through green innovation, enhancing the company's reputation and brand image.\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab7\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 7\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003e\u0026mdash;Moderating effect\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"5\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c4\" colnum=\"4\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c5\" colnum=\"5\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\" morerows=\"2\" rowspan=\"3\"\u003e \u003cp\u003eVariable\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eM\u0026thinsp;=\u0026thinsp;Quintile\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003eM\u0026thinsp;=\u0026thinsp;SOE\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003eM\u0026thinsp;=\u0026thinsp;Scale\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c5\"\u003e \u003cp\u003eM\u0026thinsp;=\u0026thinsp;ReportAttention\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(\u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e1\u003c/span\u003e)\u003c/p\u003e \u003c/th\u003e \u003cth 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\u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.3714)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.4013)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.2681)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0211)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eROA\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-0.2382\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.2050\u003csup\u003e*\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-0.0749\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e 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align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0.0127\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.1309)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.1836)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.3810)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eTop10\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-0.3044\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.3026\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-0.2789\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-0.3359\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0133)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0453)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0303)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eBalance\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-0.0041\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.0099\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.0005\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-0.0045\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.8312)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.7792)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.9902)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.9090)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eListAge\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-0.0753\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-0.0679\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-0.0462\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-0.0947\u003csup\u003e**\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0456)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.1330)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0221)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eConstant\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-6.1051\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-6.1661\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-4.7044\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-5.9106\u003csup\u003e***\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e(0.0013)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e(0.0016)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e(0.0002)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eYear FE\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eIndustry FE\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003eY\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eObservations\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e17299\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e17303\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e17295\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e12204\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cem\u003eAdj.R\u003c/em\u003e\u003csup\u003e2\u003c/sup\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.318\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.319\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.367\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e0.350\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003e \u003cem\u003ep\u003c/em\u003e-values in parentheses \u003csup\u003e*\u003c/sup\u003e \u003cem\u003ep\u003c/em\u003e\u0026thinsp;\u0026lt;\u0026thinsp;0.10, \u003csup\u003e**\u003c/sup\u003e \u003cem\u003ep\u003c/em\u003e\u0026thinsp;\u0026lt;\u0026thinsp;0.05, \u003csup\u003e***\u003c/sup\u003e \u003cem\u003ep\u003c/em\u003e\u0026thinsp;\u0026lt;\u0026thinsp;0.01\u003c/p\u003e \u003c/div\u003e"},{"header":"6. Conclusions and Implications","content":"\u003cdiv id=\"Sec42\" class=\"Section2\"\u003e\n \u003ch2\u003e6.1 Conclusions\u003c/h2\u003e\n \u003cp\u003eThis study examines the impact of internal auditing on corporate green innovation and its underlying mechanisms. First, we find that internal auditing, as a non-mandatory supervisory mechanism, significantly enhances green innovation as a strategic initiative, a conclusion that remains robust after various sensitivity and endogeneity tests. Second, by analyzing the full strategic implementation process: \u0026ldquo;strategic decision-making\u0026mdash;risk assessment and undertaking\u0026mdash;resource allocation and execution\u0026rdquo;, we identify three key pathways through which internal auditing fosters green innovation: guiding executive green awareness, promoting high corporate risk tolerance during risk assessments, and curbing financialization to secure resources for green initiatives. Finally, heterogeneity analysis reveals that the positive effect of internal auditing on green innovation is more pronounced in firms with high internal control quality, non-state ownership, larger scale and greater analyst attention.\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv id=\"Sec43\" class=\"Section2\"\u003e\n \u003ch2\u003e6.2 Implications\u003c/h2\u003e\u003cspan\u003e\n \u003cp\u003e6.2.1 Enterprises need to further innovate and improve internal audit error-correction mechanisms so that internal audits can effectively monitor and feedback on the company\u0026rsquo;s green innovation practices. Given the advantage of internal audits in monitoring insider information, they can quickly identify risks and defects in business decisions, improve the company\u0026rsquo;s green awareness, risk tolerance, and financialization levels, thus promoting green innovation and sustainable development. On one hand, management should place more emphasis on the design of internal audit systems to enhance the independence and authority of the internal audit department. On the other hand, the interaction mechanism between internal audits and corporate governance capabilities, risk assessment, and resource allocation should be coordinated, improving the economic and effective decision-making in significant corporate investments.\u003c/p\u003e\n \u003c/span\u003e \u003cspan\u003e\n \u003cp\u003e6.2.2 Enterprises should innovate their internal audit information management systems to strengthen the role of internal auditing in digital green governance. Management should explore the construction of a \u0026quot;business audit integration\u0026quot; digital platform that aligns with the company\u0026rsquo;s top-level strategy, investment and financing decisions, capital management, business operations, internal control, and risk management, based on changes in the company\u0026rsquo;s internal and external environment. This platform would integrate the micro-institutional advantages of internal audit\u0026rsquo;s risk disclosure into practice, using digital technologies to better leverage the governance function of internal auditing and promote sustainable development. Companies should also clarify the main entity responsibility for internal audit reports, strengthen the effectiveness of internal audits in overseeing the entire process \u0026mdash; before, during, and after business activities \u0026mdash; to improve resource utilization efficiency and ensure that each link in the company\u0026rsquo;s value chain can achieve value-added protection.\u003c/p\u003e\n \u003c/span\u003e\n\u003c/div\u003e\n\u003cdiv id=\"Sec44\" class=\"Section2\"\u003e\n \u003ch2\u003e6.3 Restrictions and Upcoming Studies\u003c/h2\u003e\n \u003cp\u003eThe internal audit mechanisms and conclusions drawn from this study regarding their influence on corporate green innovation are based on the unique situation in China and may be applicable only to listed companies in China or other emerging market economies. These findings may not apply to non-listed companies in China or companies in other institutional contexts. Future research should use samples from various countries and regions and include different types of firms to test the consistency of these results. Additionally, this study uses the number of green patent applications as a proxy variable to measure green innovation. However, this measure may not fully capture the multidimensionality of corporate green innovation, such as product development, process optimization, or market performance. Future research could consider selecting variables from multiple dimensions to further analyse the relationship between internal audit and green innovation and extend the research findings.\u003c/p\u003e\n\u003c/div\u003e"},{"header":"Declarations","content":"\u003ch2\u003eAuthor Contribution\u003c/h2\u003e\u003cp\u003eGuochao Liu and Jianluan Guo: conception and design, acquisition of fundingYufei Zhao: acquisition of data, analysis and interpretation of data and editing and reviewing\u003c/p\u003e"},{"header":"References","content":"\u003col\u003e\n\u003cli\u003eAbbott LJ, Daugherty B, Parker S, Peters GF. Internal Audit Quality and Financial Reporting Quality: The Joint Importance of Independence and Competence. Journal of Accounting Research. 2016;54(1): 3-40.\u003c/li\u003e\n\u003cli\u003eAbbott LJ, Parker S, Peters GF. Audit Fee Reductions from Internal Audit-Provided Assistance: The Incremental Impact of Internal Audit Characteristics. Contemporary Accounting Research. 2012;29(1): 94-118. \u003c/li\u003e\n\u003cli\u003eAl-Dhamari RA, Al-Gamrh B, Izah Ku Ismail KN, Haji Ismail SS. Related Party Transactions and Audit Fees: The Role of the Internal Audit Function. Journal of Management \u0026amp; Governance. 2018;22(1): 187-212.\u003c/li\u003e\n\u003cli\u003eAl-Twaijry, A. A. M., Brierley, J. A., \u0026amp; Gwilliam, D. R. The Development of Internal Audit in Saudi Arabia: An Institutional Theory Perspective. Critical Perspectives on Accounting, 2003;14(5): 507-531. \u003c/li\u003e\n\u003cli\u003eAllegrini M., D\u0026rsquo;Onza G., Paape L., Melville R., Sarens G. The European literature review on internal auditing. Managerial Auditing Journal. 2006;21(8): 845\u0026ndash;853. \u003c/li\u003e\n\u003cli\u003eBai XY, Lyu C. Executive\u0026apos;s Environmental Protection Background and Corporate Green Innovation: Evidence from China. 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Economic Change and Restructuring. 2022;55: 2577\u0026ndash;2603. \u003c/li\u003e\n\u003c/ol\u003e"}],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":true,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":false,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":false,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":false,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"humanities-and-social-sciences-communications","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":false,"externalIdentity":"palcomms","sideBox":"Learn more about [Humanities \u0026 Social Sciences Communications](http://www.nature.com/palcomms/)","snPcode":"41599","submissionUrl":"https://submission.springernature.com/new-submission/41599/3","title":"Humanities and Social Sciences Communications","twitterHandle":"","acdcEnabled":true,"dfaEnabled":true,"editorialSystem":"stoa","reportingPortfolio":"Nature AJ","inReviewEnabled":true,"inReviewRevisionsEnabled":false},"keywords":"Internal Auditing, Corporate Green Innovation, Executive Green Awareness, Corporate Risk Tolerance, Corporate Financialization","lastPublishedDoi":"10.21203/rs.3.rs-5908865/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-5908865/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eGreen innovation is a key strategy for enterprises to achieve sustainable development and is essential for countries to achieve high-quality economic growth. Green innovation is influenced by the corporate governance mechanism. Internal audit, as a non-mandatory system, plays a critical role in improving corporate governance, and, as a result, is crucial for enhancing corporate green innovation. This study collects and analyses data on internal auditing practices from Chinese listed companies between 2007 and 2022 to examine how internal auditing influence corporate green innovation. The results show that: (\u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e1\u003c/span\u003e) Internal auditing significantly enhances green innovation, with findings remaining robust after various robustness and endogeneity tests. (\u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2\u003c/span\u003e) Mechanism analysis reveals that internal audits promote corporate green innovation by improving executive awareness of environmental issues, increasing firms' risk tolerance, and reducing financialization, through a process of strategy implementation of \u0026ldquo;strategic choice and decision\u0026mdash;risk assessment\u0026mdash;resource allocation\u0026rdquo;. (\u003cspan citationid=\"CR3\" class=\"CitationRef\"\u003e3\u003c/span\u003e) Heterogeneity analysis shows that internal audits have a stronger impact on green innovation in firms with high internal control quality, non-state-owned enterprises, large-scale firms, and those with greater analyst attention. This study contributes to the theoretical understanding of the role of internal auditing in green innovation and provides insights for Chinese regulators to assess, guide, and improve internal audit practices in promoting sustainability.\u003c/p\u003e","manuscriptTitle":"Can non-mandatory governance mechanism promote corporate green innovation—— Evidence from Internal Audit","msid":"","msnumber":"","nonDraftVersions":[{"code":1,"date":"2025-02-10 11:14:08","doi":"10.21203/rs.3.rs-5908865/v1","editorialEvents":[{"type":"communityComments","content":0},{"type":"decision","content":"Revision requested","date":"2025-08-06T15:54:34+00:00","index":"","fulltext":""},{"type":"editorInvitedReview","content":"","date":"2025-06-08T16:48:57+00:00","index":"hide","fulltext":""},{"type":"reviewerAgreed","content":"11438897282350068310741986129652086767","date":"2025-05-27T13:32:27+00:00","index":"hide","fulltext":""},{"type":"reviewerAgreed","content":"246140806216516346786901202919024250846","date":"2025-05-27T05:22:00+00:00","index":"hide","fulltext":""},{"type":"reviewerAgreed","content":"114923980711463505903398865548101498742","date":"2025-05-27T04:17:19+00:00","index":"hide","fulltext":""},{"type":"editorInvitedReview","content":"","date":"2025-05-04T08:03:54+00:00","index":"hide","fulltext":""},{"type":"reviewerAgreed","content":"34644048654423019442681323415673134333","date":"2025-04-23T06:44:07+00:00","index":"hide","fulltext":""},{"type":"reviewersInvited","content":"","date":"2025-04-22T02:33:53+00:00","index":"","fulltext":""},{"type":"editorInvited","content":"","date":"2025-03-18T15:08:43+00:00","index":"","fulltext":""},{"type":"editorAssigned","content":"","date":"2025-03-18T15:07:16+00:00","index":"","fulltext":""},{"type":"checksComplete","content":"","date":"2025-02-07T09:58:57+00:00","index":"","fulltext":""},{"type":"submitted","content":"Humanities and Social Sciences Communications","date":"2025-01-27T02:17:40+00:00","index":"","fulltext":""}],"status":"published","journal":{"display":true,"email":"[email protected]","identity":"humanities-and-social-sciences-communications","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":false,"externalIdentity":"palcomms","sideBox":"Learn more about [Humanities \u0026 Social Sciences Communications](http://www.nature.com/palcomms/)","snPcode":"41599","submissionUrl":"https://submission.springernature.com/new-submission/41599/3","title":"Humanities and Social Sciences Communications","twitterHandle":"","acdcEnabled":true,"dfaEnabled":true,"editorialSystem":"stoa","reportingPortfolio":"Nature AJ","inReviewEnabled":true,"inReviewRevisionsEnabled":false}}],"origin":"","ownerIdentity":"ef3246e2-e7e8-41b6-b390-2e4d208ec514","owner":[],"postedDate":"February 10th, 2025","published":true,"recentEditorialEvents":[],"rejectedJournal":[],"revision":"","amendment":"","status":"under-review","subjectAreas":[{"id":43990824,"name":"Business and commerce/Business and management"},{"id":43990825,"name":"Business and commerce/Economics"}],"tags":[],"updatedAt":"2026-02-26T03:23:32+00:00","versionOfRecord":[],"versionCreatedAt":"2025-02-10 11:14:08","video":"","vorDoi":"","vorDoiUrl":"","workflowStages":[]},"version":"v1","identity":"rs-5908865","journalConfig":"researchsquare"},"__N_SSP":true},"page":"/article/[identity]/[[...version]]","query":{"redirect":"/article/rs-5908865","identity":"rs-5908865","version":["v1"]},"buildId":"8U1c8b4HqxoKbykW_rLl7","isFallback":false,"isExperimentalCompile":false,"dynamicIds":[84888],"gssp":true,"scriptLoader":[]}