We evaluated the moderating effects of firm size and leverage on the working capital finance (WCF)–profitability relationship among Chinese companies during 2000–2017. Applying the generalized method of moments (GMM) technique on panel data, we observed that firm size and leverage have strong moderating roles in the WCF–profitability relationship. We observed that small or low-leverage firms have an inverted U-shaped WCF–profitability relationship. However, this relationship is U-shaped for large or high-leverage firms. We report break-even points in these relationships that show the portion of short-term debt in working capital financing. The results reveal that the break-even point for all subgroups (small, large, low-leverage, and high-leverage firms) decreases compared to the break-even point of the full sample. This study shows how the break-even point of the WCF–profitability relationship shifts when a company expands or its leverage level changes. Managers can use this information for profit maximization.

Conducting research into the multifaceted aspects of environmental regulation and the pivotal role played by digitalization in promoting sustainable innovation represents an invaluable compass guiding the path toward green development. However, it receives little attention in Small and Medium-Sized Enterprises (SMEs). This study examines the impact of environmental regulations on sustainable innovation in SMEs and the moderating role of digitalization. Findings from a panel of 871 SMEs over the period 2012-2020 reveal that command control and public-participative regulations have a U-shaped relationship with green innovation in SMEs, with digital tools accelerating their effects. Market-incentive regulations exhibit an inverted U-shaped effect, with digitalization enhancing the benefits of pursuing green incentives. These insights emphasize the importance of tailored approaches that consider regulatory diversity and the transformative potential of digitalization in promoting green development within SMEs.

Modern literature emphasises the enterprise innovation theory of balancing explorative and exploitative activities to control the moral hazards of technology investment. Many studies overlook the noisy perspective of innovation and offer various instruments for more or less innovation. We attempt to diverge the debate and unfold the sensitivity of managerial equity incentive schemes on the subject of the quality of innovation. Investment in patents and R&D is applied to account for quantity and quality innovation, respectively. Fixed-effects and logit regression modelling are used for basic estimations and a two-step system GMM is applied to control the endogeneity. The estimations validate that stock appreciation incentives are more sensitive to the quantity of innovation, whereas, stock options and restricted equity rights have a strong impact on the quality of innovation. Subsample analysis revealed that the explanatory power of our predictions is highly pronounced in large and young firms. Innovative firms are suggested to design the managerial equity incentive portfolio as per their technological choices. Firms should consider the sensitivity of equity incentive schemes to control effort ex-ante, especially to attain technology leadership and optimal corporate value in the long run.