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Is firm-level clean or dirty innovation valued more?

Dechezleprêtre, Antoine, Muckley, Cal B. and Neelakantan, Parvati (2021) Is firm-level clean or dirty innovation valued more? European Journal of Finance, 27 (1-2). 31 - 61. ISSN 1351-847X

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Identification Number: 10.1080/1351847X.2020.1785520

Abstract

We examine how Tobin's Q is linked to ‘clean’ and ‘dirty’ innovation and innovation efficiency at the firm level. Clean innovation relates to patented technologies in areas such as renewable energy generation and electric cars, whereas dirty innovation relates to fossil-based energy generation and combustion engines. We use a global patent data set, covering over 15,000 firms across 12 countries. We find strong and robust evidence that the stock market recognizes the value of clean innovation and innovation efficiency and accords higher valuations to those firms that engage in successful clean research and development activities. The results are substantively invariant across innovation measurement, model specifications, estimators adopted, select sub-samples of firms and United States and European patent offices.

Item Type: Article
Official URL: https://www.tandfonline.com/journals/rejf20
Additional Information: © 2020 Informa UK Limited, trading as Taylor & Francis Group
Divisions: Grantham Research Institute
Subjects: H Social Sciences > HG Finance
G Geography. Anthropology. Recreation > GE Environmental Sciences
T Technology
JEL classification: G - Financial Economics > G3 - Corporate Finance and Governance > G35 - Payout Policy
G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure
Date Deposited: 26 Jul 2022 14:27
Last Modified: 02 Aug 2022 07:21
URI: http://eprints.lse.ac.uk/id/eprint/115659

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