Managerial myopia is characterized by the inclination of corporate executives to give precedence to short-term financial achievements, often to the detriment of sustainability and growth [13]. Under the neoclassical theoretical framework, firms are expected to maximize shareholder value. However, within the complexities of a dynamic market environment, management may not always act rationally [6]. Personal biases and cognitive limitations often drive decisions favoring immediate profits over long-term investments essential for sustainable growth. Present-oriented managers tend to prioritize short-term earnings and stock performance, sidelining sustainability efforts requiring prolonged investment and delayed returns [7]. Previous research has explored the ramifications of managerial myopia across various aspects, including sustainable development [16], firm duration [17], innovation capabilities [18], and supply chain concentration [19].

Green innovation encompasses product and process advancements aimed at reducing environmental harm—such as air pollution and carbon emissions—while promoting organizational change and sustainable marketing practices [20]. It functions as a strategic tool enabling companies to meet customer demand for sustainable practices, improve their public perception, and gain a competitive advantage, all while addressing environmental challenges. It serves as a strategic tool for meeting customer demand for sustainable practices, enhancing public image, gaining competitive advantage, and addressing environmental challenges. [21,22]. Nonetheless, the dual nature of “innovation” and “green” entails substantial risks, prompting some managers to limit green investments over concerns about short-term financial performance. [23]. The inherent tension between the necessity of green innovation and the risks it entails has garnered substantial academic interest. Numerous researches have investigated contributors that influence the extent of green innovation within firms, including corporate governance [24], ESG performance [25], firm ownership [26], and access to finance [27], among other factors.

Previous literature indicates that myopic managers often adopt a pessimistic outlook, where their biased assessment of declining market conditions results in underinvestment issues [28]. Under such circumstances, managerial decision-making becomes increasingly skewed toward short-term returns—shaping resource allocation, project selection, and strategic choices in ways that sideline long-horizon innovative investments and, in turn, erode the firm’s long-term growth and competitiveness. [29]. Unlike general innovation, green innovation involves greater environmental concerns, longer payback periods, larger investments, higher risks, and uncertain returns [25]. These features conflict with myopic managers’ short-term profit goals, making green innovation more likely to be deprioritized.

The inhibiting effect of managerial myopia on green innovation can be better understood by unpacking the multiple organizational and behavioral channels through which short-termism shapes firms’ innovation choices. First, from the standpoint of green innovation activities, which inherently involve high risks and significant investments, the risk-averse and conservative tendencies associated with managerial myopia may lead firms to underinvest in such initiatives. Second, at the corporate governance level, managerial myopia often reflects weak governance structures and inadequate internal oversight, leading to inefficiencies in green innovation efforts. Furthermore, myopic management tends to attach more importance to immediate financial gains rather than sustainability, thereby undermining their green innovation capabilities [30].

In summary, firms affected by managerial myopia may tend to prioritize short-period performance to the detriment of addressing environmental challenges via green innovation. Accordingly, this paper proposes a hypothesis:

Hypothesis 1

Managerial myopia negatively affects firms’ green innovation capabilities.

Drawing upon the classification framework developed by Yang et al. [25], this study delineates a firm’s GI capacity into five distinct indicators: total authorized green patents (GI _i,t ), independently obtained patents (GI_indep _i,t ), joint patents (GI_joint _i,t ), invention patents (GI_inv _i,t ), and utility model patents (GI_ninv _i,t ), which respectively capture overall, independent, collaborative, high-quality, and general levels of GI. All indicators are log-transformed after adding one to reduce skewness and facilitate empirical analysis.

This study identifies Myopia through text analysis of the “Management Discussion and Analysis” section in annual reports. Based on Liang and Li [44], ten seed words (e.g., “as soon as possible,” “immediately,” “pressure”) are used to derive 33 myopia-related keywords via machine learning. The frequency of these terms forms the core explanatory variable, Myopia, with higher values indicating stronger short-term orientation (see Equation 4). To capture lagged effects and reduce endogeneity, the variable is lagged by one period. M y o p i a i , t = ″ Managerial    Myopia ″   word    frequency   Total    frequency    of    words    in    the MD ″ & A ″   section × 100 (4)

To enhance the accuracy and scientific validity of measuring environmental regulation intensity, this study adopts a composite index construction method, as suggested by Lin et al [45]. It calculates the command-based regulation variable (MER) by weighting pollutant emission reductions across provinces. Given the data availability, this study specifically considers three key pollutants: sulfur dioxide, nitrogen dioxide, and solid particulate matter. The data matrix for pollutant emission reductions is constructed as Equation 5. M E R = ∑ j = 1 n w j × S D P i j (5) where SDP represents the pollutant reduction after standardization; w denotes the weight of each pollutant indicator.

Conversely, economic incentives serve as a crucial mechanism for pollution control in China [46]. Following Zhang et al. [47], this study measures market-based environmental regulation (SER) using completed investment in industrial pollution control within provincial fiscal expenditures. To account for regional economic scale differences, the indicator is normalized by industrial value added, as shown in Equation 6. Moreover, to reflect regulatory timeliness, the ER variables are lagged by one period to align with managerial myopia. S E R = I nvestment    in    industrial    pollution    control Value    added    of    industrial    production    by    province (6)

Media attention is classified into positive and negative categories [48]. This study measures positive media coverage (PM) as the annual count of favorable news reports across online and print media, and negative media coverage (NM) as the total of unfavorable reports. To facilitate coefficient interpretation, both counts are standardized. Considering the timing of media influence on management, PM and NM variables are lagged by one period to align with managerial myopia.

Drawing from the existing literature, this study identifies a set of control variables which may have impacts on the model, focusing on management characteristics, the company’s financial status, and organizational structure: (1) total assets (Size), expressed in billions of yuan; (2) ratio of total liabilities to assets (LEV); (3) ratio of the current year’s operating income to the previous year minus 1 (Growth); (4) management fee divided by operating income (Mfee); (5) institutional investor shareholding ratio (INST); (6) two positions in one (Dual); (7) operating income divided by total assets (ATO); (8) ratio of the second-largest shareholder’s equity to that of the largest shareholder (Balance); (9) years of establishment plus 1 and taking the natural logarithm (Age).

Table 5 column (1) shows that Myopia × MER significantly negatively affects GI, indicating that higher MER intensity amplifies the adverse effect of Myopia on GI, supporting Hypothesis 2a. Conversely, column (2) finds no significant effect of Myopia × SER. This may stem from the compliance costs of mandatory emission targets, which pressure short-sighted managers to cut long-term environmental spending to stabilize profits. Thus, regulatory costs may crowd out green innovation investments. Moreover, provincial pollution-control investments may not directly address enterprises’ survival or profitability concerns, so managers may still avoid applying them to green R&D, which could explain why Hypothesis 2b is not supported.

The media coverage results in Table 6 show that Myopia × PM in column (1) is not significant, while Myopia × NM in column (2) showed a positive effect on GI, supporting Hypothesis 3b. This indicates negative media attention weakens Myopia’s adverse effect, likely because the public reacts more strongly and persistently to negative news [51]. Consequently, negative media reports exert a stronger binding effect on short-sighted managers, prompting them to curb short-termism and adopt environmental strategies that enhance corporate image, thereby promoting green innovation.

Table 7 demonstrates the moderating role of ER in the connection between Myopia and four types of GI. The results in columns (1) to (4) reveal that only MER significantly moderates the association between Myopia and independently conducted GI. Two possible explanations are as follows: first, independently conducted green patents require long-term, substantial investments to achieve successful outcomes, whereas joint R&D facilitates resource sharing, which helps disperse the risks. Second, firms engaged in joint R&D are subject to mutual supervision and constraints, limiting the ability of myopic management to cut green innovation spending due to the risk of collaboration breakdowns.

Columns (5) to (7) indicate that MER intensifies the negative relationship between Myopia and non-inventive GI. Non-inventive green patents typically require lower investments, shorter development cycles, and offer greater flexibility, making them easier targets for reduction under short-term compliance pressure. In contrast, inventive green patents involve higher technological thresholds and promise greater returns, helping firms meet stricter emission standards. Due to their investment inertia, firms find it harder to implement substantial cutbacks in the short term.

Table 8 presents the regression results on the moderating effects of media coverage on the four types of GI. The findings in columns (1) to (4) show that only negative media attention significantly alleviates the adverse impact of Myopia on independently obtained GI. This result can be attributed to the pressure exerted by negative public scrutiny, which prompts management to respond more decisively. Joint R&D typically involves multiple partners, requiring the coordination of interests and allocation of responsibilities, which can be time-consuming and costly. In contrast, independent R&D allows firms full control over the development process, yielding more favorable short-term outcomes that address social concerns more effectively.

The results in columns (5) to (7) indicate that negative media coverage only mitigates the adverse impacts of Myopia on inventive GI. This finding suggests that developing inventive green patents not only demonstrates a firm’s innovation strength but also signals a sincere commitment to environmental responsibility. Under negative public scrutiny, firms are pressured to respond with more credible and impactful measures. As a result, management may be more motivated to restrain shortsighted behavior and redirect R&D efforts toward inventive patents, which are more innovative and visible, in order to gain public recognition and restore reputation.

The reform of state-owned firms (SOEs) is central to China’s economic system reform [52], and national ownership can efficiently facilitate environmental responsibility [53]. Columns (1) and (2) in Table 9 present group regression results, showing that Myopia does not significantly hinder GI in SOEs, but has a strong negative effect in non-SOEs. This contrast may stem from SOEs’ tighter policy oversight and greater public accountability, which help restrain managerial short-sightedness and support green innovation. Additionally, SOEs typically enjoy more stable financing and stronger fiscal backing, reducing short-term performance pressure and enabling sustained investment in green initiatives.

Columns (3) and (4) in Table 9 display the results for firms in heavily and non-heavily polluting industries, respectively. The results reveal that managerial myopia does not significantly hinder GI in heavily polluting industries, but has a pronounced negative effect in non-heavy polluting firms. Externally, heavy-polluting industries typically face stricter environmental regulations and societal scrutiny, compelling management to mitigate short-sighted behaviors and adhere to environmental standards, thereby fostering green innovation to avoid penalties and public backlash. Internally, to remain competitive, management in heavily-polluting sectors may be driven to reduce myopic decision-making and proactively increase investment in green R&D to satisfy market demand for sustainable practices.