Green Patent Signaling: Evidence from Voluntary Climate Disclosures
Griffin Geng  1@  , Hai Lin  1@  , Ilan Noy  1@  , Zijun Zhao  1@  
1 : Victoria University of Wellington

We investigate how green patents signal the credibility of voluntary climate disclosures and how this perceived credibility, in turn, influences firms' decisions to provide these disclosures. By exploiting the exogenous variation in green patent issuance due to patent examiners' leniency, we find that firms with more green patents are more likely to issue voluntary climate disclosures. Consistent with the credibility-enhancement explanation, we show that climate disclosures are associated with increased stock returns around the disclosure dates for firms with more green patents. Furthermore, these firms see a greater increase in institutional ownership after the disclosures, predominantly from climate-conscious investors. Additional analyses reveal that the impact of green patents is particularly strong in cases where disclosures are perceived as less credible and among firms with lower reputational capital. These findings underscore the role of green patents in signaling the credibility of climate disclosures and shaping firms' climate disclosure decisions.


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