Climate-Related Innovations: Economic Value and Risk Mitigation

66 Pages Posted: 12 Jul 2022

See all articles by Huan Kuang

Huan Kuang

Bryant University

Bing Liang

University of Massachusetts Amherst - Department of Finance

Date Written: June 30, 2022

Abstract

Through a novel design to link climate risk and the U.S. firm patents related to climate change mitigation technologies (CCMTs), we find that CCMT innovations generate significant economic value and are effective in mitigating firms’ carbon risk, especially when such risk is high and investor sentiment is more negative. We also find that adoption of a new patent classification scheme has promoted more CCMT innovations in the United States. However, our results show mixed evidence on firms’ carbon risk and their CCMT innovation activities, which suggests that the government can play a more prominent role in promoting activities in CCMTs.

Keywords: Climate change; Climate change mitigation technologies, Patents; Asset pricing, Risk

JEL Classification: G10; G11; Q54; Q55

Suggested Citation

Kuang, Huan and Liang, Bing, Climate-Related Innovations: Economic Value and Risk Mitigation (June 30, 2022). Available at SSRN: https://ssrn.com/abstract=4150960 or http://dx.doi.org/10.2139/ssrn.4150960

Huan Kuang (Contact Author)

Bryant University ( email )

1150 Douglas Pike
Smithfield, RI 02917
United States

HOME PAGE: http://www.bryant.edu/academics/faculty/kuang-huan

Bing Liang

University of Massachusetts Amherst - Department of Finance ( email )

Amherst, MA 01003
United States

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