The Green Innovation Premium: Evidence from U.S. Patents and the Stock Market

Markus Leippold and Tingyu Yu
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Markus Leippold: University of Zurich; Swiss Finance Institute
Tingyu Yu: University of Zurich

No 23-21, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: This paper investigates if firms’ green innovation efforts are reflected in their stock market prices. Firms with a higher proportion of green patents experience lower stock returns than those with a lower percentage. A long-short portfolio based on green patent shares has an average annual return of 8%, which remains significant when we control for common risk factors. However, firms with high green patent shares outperform their counterparts after events that increase climate concerns and strengthen environmental regulations. Moreover, firms with green innovation attract more institutional ownership and can weakly decrease their future carbon intensity and incident involvement.

Keywords: Green patents; cross-section of stock returns; event study; institutional investors (search for similar items in EconPapers)
JEL-codes: G12 G14 O34 Q55 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2023-03
New Economics Papers: this item is included in nep-ene, nep-env, nep-fmk, nep-ino, nep-ipr, nep-res, nep-sbm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2321

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