Abstract: Green transformation provides new opportunities for Chinese enterprises to break through green investment barriers and improve the performance of their overseas subsidiaries. Using the panel data of Chinese manufacturing enterprises and their overseas subsidiaries from 2008 to 2022, this study examines the impact of parent company's green transformation on the performance of overseas subsidiaries through a quasi-natural experiment based on the creation of green factories. The findings show that the green transformation of parent companies can help improve the performance of overseas subsidiaries. The impact mechanism test reveals that the green transformation of the parent company can increase the probability of the parent company entering the host country(region) in a sole proprietorship mode and release green signals, thus the green transformation of the parent company can improve the performance of overseas subsidiaries. The moderation effect analysis reveals that the institutional distance between the home country and the host country(region) may weaken the effect of the parent company's green transformation on the performance improvement of overseas subsidiaries. The heterogeneity analysis reveals that the improvement effect of green transformation of parent companies on the performance of overseas subsidiaries is more significant in parent companies belonging to polluting industries. Compared to R&D overseas subsidiaries, the parent company's green transformation has a stronger effect on improving the performance of production and commercial overseas subsidiaries. To this end, the government should continue to promote and support the creation of green factories, lead foreign direct investment with greenness, and assist Chinese enterprises in high-quality “going global”.

Key words: green transformation, green factory establishment, multinational company, performance of foreign subsidiaries, institutional distance