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Journal article
Is firm-level clean or dirty innovation valued more?
Antoine Dechezleprêtre, Cal B. Muckley and Parvati Neelakantan
July 2020
Paper No' :

JEL Classification: G35; G32; C58

Tags: productivity; research and development; clean technology; dirty technology; market value; patents and citations

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.