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Green technologies and firms’ market value: a micro-econometric analysis of European firms

Author

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  • Alessandra Colombelli
  • Claudia Ghisetti
  • Francesco Quatraro
Abstract
This paper investigates the impact of the generation of green (environmental) technologies on the market value (MV) of a sample of listed companies. The analysis is grounded on the combination of two different theoretical approaches, that is the one focusing on the relationship between MV and innovation and the one pertaining to the economic effects of eco-innovation. Environmental regulation, based on the regulatory push–pull effect, induces firms to cope with more stringent rules through innovation efforts, and this eventually leads to the emergence of new markets for the suppliers of green technologies (GTs). Our main hypothesis is that firms able to generate GTs can be expected to show better stock market performances in this framework, because of the prospects of regulation-driven profitability gains. The empirical analysis has been carried out on a sample of listed firms from France, Germany, Italy, the Netherlands, and the UK observed over the 1985–2011 time span, and it is based on the implementation of the most recent version of the MV equation, corrected for selection bias. Results are consistent with those of previous literature and highlight the positive impact of innovation on MV. When narrowing the focus to firms operating in sectors with a high propensity to generate GTs, we have found that the stringency of the environmental regulatory framework also yields a positive a significant impact, as does the stock of GTs vis-à-vis non-GTs. Moreover, environmental regulatory framework positively moderates the positive effect of the stock of GTs. Lastly, the quality of firms’ own knowledge stocks is also found to positively influence firms’ MV.

Suggested Citation

  • Alessandra Colombelli & Claudia Ghisetti & Francesco Quatraro, 2020. "Green technologies and firms’ market value: a micro-econometric analysis of European firms," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 29(3), pages 855-875.
    • Handle: RePEc:oup:indcch:v:29:y:2020:i:3:p:855-875.
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    File URL: http://hdl.handle.net/10.1093/icc/dtaa003
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    Cited by:

    1. Gatti, Donatella, 2022. "Going green and (un)equal ? Political coalitions, redistribution, and the environment," Economic Modelling, Elsevier, vol. 116(C).
    2. Jinhuan Tian & Yan Dong & Gianluca Vagnani & Peizhong Liu, 2023. "Green innovation and the stock market value of heavily polluting firms: The role of environmental compliance costs and technological collaboration," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 4938-4953, November.
    3. Hsu, Ching-Chi & Ngo, Quang-Thanh & Chien, FengSheng & Li, Li & Mohsin, Muhammad, 2021. "Evaluating green innovation and performance of financial development: mediating concerns of environmental regulation," MPRA Paper 109671, University Library of Munich, Germany.
    4. Davide Antonioli & Claudia Ghisetti & Massimiliano Mazzanti & Francesco Nicolli, 2022. "Sustainable production: The economic returns of circular economy practices," Business Strategy and the Environment, Wiley Blackwell, vol. 31(5), pages 2603-2617, July.
    5. Dughera, Stefano & Quatraro,Francesco & Ricci,Andrea & Vittori,Claudia, 2021. "For the rest of our lives: Flexibility and innovation in Italy," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 202102, University of Turin.
    6. Siedschlag, Iulia & Yan, Weijie, 2023. "Do green investments improve firm performance? Empirical evidence from Ireland," Technological Forecasting and Social Change, Elsevier, vol. 186(PB).

    More about this item

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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