Corporate Governance and Green Innovation
Mario Daniele Amore
INSEAD - Economics and Political Sciences
April 21, 2015
INSEAD Working Paper No. 2014/35/EPS
We present evidence of corporate governance effects on firms’ environmental innovation. Exploiting changes in antitakeover legislation in the US, we show that worse governed firms generate fewer green patents relative to all their innovations. This negative effect is greater for firms with a smaller share of institutional ownership, with a smaller stock of green patents, and with more binding financial constraints. Investigating regulatory and industry variations, we also find more pronounced effects for firms operating in states with lower pollution abatement costs, and in sectors less dependent on energy inputs. Overall, our results suggest that a shift in corporate governance toward more managerial entrenchment will weaken the incentives and resources necessary to devise and sustain green innovation strategies.
Number of Pages in PDF File: 49
Keywords: corporate governance, environment, green innovation, patents
JEL Classification: G34, O31, Q20
Date posted: February 13, 2013 ; Last revised: April 21, 2015
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