Stock Market Reaction to Green Vehicle Innovation

Production and Operations Management, Vol. 22, Issue 4, pp.976-990, 2013

40 Pages Posted: 2 Apr 2012 Last revised: 17 Jul 2014

See all articles by Sulin Ba

Sulin Ba

University of Connecticut School of Business

Ling Lei Lisic

Virginia Polytechnic Institute & State University - Pamplin College of Business

Qindong Liu

Dow Chemical Portfolio Investments

Jan Stallaert

University of Connecticut - School of Business

Date Written: May 17, 2012

Abstract

We study the stock market reaction to announcements of global green vehicle innovation over a 14-year time span (1996 to 2009) using the event study methodology. We document that the stock market generally reacts positively to automakers’ announcements of environmental innovations, consistent with prior research on the wealth effects of innovation announcements. Our results indicate that crucial green product development decisions such as innovation type and market segment choices exert direct influence on a firm’s market value. We also find that these results hold when controlling for firm size, leverage, profitability, R&D intensity, and oil price changes.

Keywords: Automobile Industry, Corporate Sustainability, Event Study, Green Innovation, New Product Development

Suggested Citation

Ba, Sulin and Lisic, Ling Lei and Liu, Qindong and Stallaert, Jan, Stock Market Reaction to Green Vehicle Innovation (May 17, 2012). Production and Operations Management, Vol. 22, Issue 4, pp.976-990, 2013 . Available at SSRN: https://ssrn.com/abstract=2033413 or http://dx.doi.org/10.2139/ssrn.2033413

Sulin Ba

University of Connecticut School of Business ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

Ling Lei Lisic

Virginia Polytechnic Institute & State University - Pamplin College of Business ( email )

1016 Pamplin Hall
Blacksburg, VA 24061
United States

Qindong Liu (Contact Author)

Dow Chemical Portfolio Investments ( email )

1320 Waldo Ave.
Suite 100
Midland, MI 48642
United States

Jan Stallaert

University of Connecticut - School of Business ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

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