Tournament incentives and environmental performance: the role of green innovation

Since sustainable development concerns emerged, researchers have studied which environmental regulations motivate companies to improve their environmental performance. Environmental goals are best achieved by either changing people’s behavior or modifying technology. Thus, this study contributes to the existing literature on corporate governance and social and environmental accountability by examining the impact of CEO’s tournament incentives (TI) on Chinese firms’ environmental reporting and performance. Furthermore, the study consequently establishes how much tournament incentives and environmental practices connection are explained with green innovation. Using the panel data regression model, the study finds that CEOs’ tournament incentives are favorably connected with Chinese enterprises’ environmental performance and negatively with environmental reporting over 10 years (2010–2019). Furthermore, our findings suggest that green innovation positively mediates the TI environmental performance nexus. The study provided excellent implications for Chinese society, which can lead to achieving a “greener GDP” and a “harmonious society” for which China is dreaming and striving. The study findings have significant implications for stakeholders, including CEOs’ policymakers, corporate regulators, environmentalists, and policymakers.