Fiscal decentralization, green innovation and low-carbon transition of heavily polluting firms.

Fiscal decentralization can activate enterprise development kinetic energy, and has an important driving role in low-carbon transformation of heavily polluted enterprises. Using the data of heavy polluting enterprises listed in A-share companies from 2008 to 2022, article empirically examines low-carbon transformation effect of fiscal decentralization in heavy polluting enterprises and its mechanism of action. It is found that fiscal decentralization significantly promotes low-carbon transition of heavy polluting enterprises. Analysis of impact mechanism shows that, on one hand, from perspective of technological innovation, fiscal decentralization promotes low-carbon transformation by promoting the heavy polluting enterprises to increase quality of green technological innovation, efficiency of green technological research and development, and efficiency of green results transformation; on other hand, from perspective of management innovation, fiscal decentralization promotes low-carbon transformation through pathway of enhancing green management innovation. Heterogeneity analysis shows that promotion effect of fiscal decentralization on low-carbon transition of heavy polluting enterprises is more significant in non-new energy enterprises, enterprises with lower audit quality, and enterprises located in inland cities or non-transportation hub cities. In addition, when the green technology R&D efficiency index ≤0.3373, the promotion effect of fiscal decentralization on low-carbon transition of heavy polluting enterprises is not obvious, when 0.3373 < green technology R&D efficiency index <0.8497, fiscal decentralization gradually promotes the low-carbon transition of heavy polluting enterprises, and when the green technology R&D efficiency index ≥0.8497, fiscal decentralization substantially promotes the low-carbon transition of heavy polluting enterprises. We assesses economic consequences of fiscal decentralization in terms of sustainable development and provides micro-level empirical evidence on promotion mechanism of low-carbon transition.