The Impact of Corporate Climate Action on Financial Markets: Evidence from Climate-Related Patents

Résumé

We study the impact of climate-related patents on financial markets. We exploit the quasi-random assignment of patent examiners with different degrees of leniency as an exogenous shock in patent approvals to allow for causal interpretations. We find that firms with more lucky climate-related patents subsequently display higher positive cumulative abnormal stock returns and enjoy a lower cost of capital, compared with similarly innovative but unlucky firms. These results hold especially during periods of high attention towards climate change and for initial climate patent granting. Firms with more lucky climate-related patents also exhibit better environmental ratings and attract more responsible institutional investors. OLS regressions show that firms developing more climate-related technologies reduce more direct carbon emission intensity.

Mots-clés

climate-related patents; green patents; examiner leniency; climate change; implied cost of capital; ESG ratings; responsible investors; CO2 emissions.;

Codes JEL

G11: Portfolio Choice • Investment Decisions
G23: Non-bank Financial Institutions • Financial Instruments • Institutional Investors
G24: Investment Banking • Venture Capital • Brokerage • Ratings and Ratings Agencies
O34: Intellectual Property and Intellectual Capital