Corporate misconduct, audit fees, and board gender diversity in green innovation
Abstract
This study investigates the association of financial restatements, corporate misconduct, and audit fees with corporate green innovation (measured by green patent applications and citations), and examines the moderating role of board gender diversity (BGD). Drawing on legitimacy theory, agency theory, and the resource-based view, we explore how governance mechanisms shape firms’ strategic responses to reporting failures and reputational challenges. Using a panel of Chinese listed firms from 2015 to 2024, comprising 14,317 firm-year observations, we employ fixed-effects regression models and conduct robustness checks, including alternative specifications and subsample analyses. Results indicate that financial restatements, corporate misconduct, and audit fees are positively associated with both the quantity and quality of green innovation. This finding supports legitimacy-seeking and governance-assurance mechanisms over resource-constraint arguments. Moreover, BGD positively moderates these relationships: firms with gender-diverse boards exhibit stronger links between governance pressures and green innovation. These findings suggest that ethical conduct and audit quality function as strategic resources for legitimacy restoration and technological advancement. This study contributes to the literature by jointly examining multiple governance pressures affecting green innovation and identifying gender-diverse boards as a governance characteristic that facilitates the translation of ethical accountability into innovation outcomes.