Work

Environmental enforcement actions and corporate green innovation

Year: 2024

Type: article

Abstract: This study explores the influence of U.S. Environmental Protection Agency (EPA) enforcement on corporate green innovation, as measured by green patent counts and citations. Our findings show that EPA-enforced firms experience a substantial uptick in green innovation outputs. This boost can be attributed to enhanced green innovation efficiency and increased hiring of green inventors. Moreover, this effect is more pronounced for firms headquartered in states with stronger environmental enforcement intensity, firms with higher institutional ownership, and firms with fewer financial constraints. Finally, we find that green innovations help enforced firms avoid future EPA enforcements and reduce toxic chemical releases. Taken together, these results imply that EPA enforcement actions can indeed foster positive impacts on corporate green innovation.

Source: Journal of Corporate Finance

DOI: 10.1016/j.jcorpfin.2024.102711

Authors: Qiyang He, Buhui Qiu

Institution: The University of Sydney

Language: English

Topic: Environmental Sustainability in Business

Subfield: Marketing

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Peace, justice, and strong institutions, Climate action, Industry, innovation and infrastructure

Open Access status: hybrid

Estimated APC paid: $3,650