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Does corporate eco-innovation affect stock price crash risk?
The British Accounting Review, Volume: 53, Issue: 5, Start page: 101031
Swansea University Author: Saadia Irfan
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DOI (Published version): 10.1016/j.bar.2021.101031
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 25...
Published in: | The British Accounting Review |
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ISSN: | 0890-8389 |
Published: |
Elsevier BV
2021
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Online Access: |
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URI: | https://cronfa.swan.ac.uk/Record/cronfa67288 |
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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. |
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Keywords: |
Eco-innovation; Stock price crash risk; Information asymmetry; Political leadership's ideology |
College: |
Faculty of Humanities and Social Sciences |
Issue: |
5 |
Start Page: |
101031 |