This study explores the impact of governmental green subsidies on corporate sustainability performance. Utilizing data from A-share listed companies in China between 2013 and 2023, we empirically analyze how green subsidies influence both corporate financial and environmental performance through green technology innovation, while also investigating the moderating effects of internal and external factors. We find that: first, green subsidies positively affect both financial and environmental performance, promoting the green transformation and sustainable development of firms; second, green technology innovation serves as a mediator in the relationship between green subsidies and corporate sustainability performance, enabling firms to leverage subsidies for sustainable growth; and third, the degree of digital transformation and media coverage both enhance the indirect effect of green subsidies on sustainability performance through green technological innovation. Robustness tests further validate these findings, reinforcing their reliability. This paper provides insights into the mechanisms by which green subsidies, under varying internal and external conditions, enhance sustainability performance via green technological innovation, offering practical implications for firms pursuing green development and for policymakers designing environmental subsidy programs.

Green Subsidies, Corporate Sustainability Performance, Government Subsidies