Thesis
Technological green innovation and financial markets
- Creator
- Rights statement
- Awarding institution
- University of Strathclyde
- Date of award
- 2024
- Thesis identifier
- T17116
- Person Identifier (Local)
- 202067033
- Qualification Level
- Qualification Name
- Department, School or Faculty
- Abstract
- This PhD thesis comprises three empirical chapters investigating the impact of technological green innovation (TGI) on equity markets. The first empirical chapter examines whether institutional investors (IIs) invest more in firms with higher levels of TGI intensity and whether such investments depend on the characteristics of IIs. I answer these questions by employing a time-varying investor-level dataset of IIs' equity ownership of their investee firms across 50 countries and exploiting the 1st Kyoto Protocol commitment as an exogenous variation to TGI. The results indicate that firms with higher TGI (TGI firms) draw higher equity ownership from IIs. Further, the attractiveness of TGI depends on the heterogeneous characteristics of IIs. Specifically, I find that IIs that are independent and have longer-term investment horizons invest more in TGI firms. In the second empirical chapter, I examine the effects of TGI intensity on financial analysts’ perspectives of TGI firms. In particular, I investigate if firms engaged in TGI development can attract more active involvement of analysts (i.e., the number of analysts following the firm, revisions of recommendations, and the quality of earnings forecast). We apply the same setup employed in the first empirical study. The results suggest that financial analysts have a negative view of TGI firms, evidenced by reduced analyst coverage and the downgrading of their recommendations. TGI intensity also adversely affects the analysts’ forecast accuracy and consistency in earnings forecasts. The third empirical chapter focuses on the short-term relationship between TGI information and investors’ perceptions. I employ non-technological green innovation (non-TGI) to investigate the market reaction to TGI and non-TGI information. Using the Japanese stock exchange, which dominates the largest innovative patents of globally listed firms, discovers the negative response of investors to both TGI and non-TGI information, and there is no difference in the market reaction among them. However, including the 1st Kyoto Protocol commitment as a regulation indicator demonstrates that the regulation has a negative impact on the market reaction to non-TGI information, while it does not influence the market reaction to TGI information. In addition, the evidence suggests that the value of analysts’ recommendations is associated with the TGI information. My empirical evidence suggests that market participants (i.e. investors and financial analysts) have different perspectives on TGI activities regarding the implications on firms’ environmental and financial performance. Short-term operating uncertainty rising along TGI activities can impede investors and financial analysts from incorporating the value of TGI benefits, reducing the value of TGI firms. On the other hand, firms engaged in TGI activities promote long-term maximisation through operating performance and sustainability, which can support stakeholders’ long-term benefits.
- Advisor / supervisor
- Paudyal, Krishna
- Thapa, Chandra
- Resource Type
- DOI
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