Document Type
Journal Article
Publication Title
The British Accounting Review
Publisher
Elsevier
School
School of Business and Law
RAS ID
36038
Funders
Edith Cowan University - Open Access Support Scheme 2021
Abstract
We examine the effect of corporate environmental innovation (hereafter eco-innovation) on stock price crash risk and document a significant negative association. Utilising a large sample of publicly listed U.S. firms for the period 2003 to 2017, we find that an increase in eco-innovation from the 25th to the 75th percentile is associated with 17.62% reduction in stock price crash risk. This outcome remains robust to a variety of sensitivity tests and after accounting for potential endogeneity concerns. Eco-innovative firms attract more institutional investors and equity analyst following and disclose more information leading to lower stock price crash risk. Additional tests reveal that the negative effect of eco-innovation is contingent on the political leadership's ideology and environmental sensitivity. Our paper contributes to the ongoing discourse on the costs and benefits of eco-innovation, documenting the value-enhancing perspective of eco-innovation.
DOI
10.1016/j.bar.2021.101031
Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 License.
Included in
Accounting Commons, Finance and Financial Management Commons, Technology and Innovation Commons
Comments
Zaman, R., Atawnah, N., Haseeb, M., Nadeem, M., & Irfan, S. (2021). Does corporate eco-innovation affect stock price crash risk?. The British Accounting Review, 53(5), Article 101031. https://doi.org/10.1016/j.bar.2021.101031