Regulatory Greening: The Impact of Environmental Legislation on Corporate Green Innovation

China's New Environmental Protection Law (NEPL) is an important adjustment in the face of the “new normal of economic development”. Leveraging the Difference-in-Difference (DID) method, we discern the multifaceted positive effects of the NEPL on both the qualitative and quantitative dimensions of green innovation. The mechanism analysis indicates that the enactment engenders heightened environmental awareness among senior management, increased cash holdings, and released financing constraints, leading to enhance the green innovations. Interestingly, the management positive tune can improve the NEPL's promotion effect on green innovation scale, but its moderating effect on the quality development is not significant. Furthermore, the NEPL can more comprehensively and significantly enhance the green innovation activities in capital-intensive industries and large corporations.