IDEAS home Printed from https://ideas.repec.org/a/bla/bstrat/v34y2025i5p6304-6324.html
   My bibliography  Save this article

Climate Change, Innovation Efficiency, and Shareholder Wealth: Insights From the Paris Agreement

Author

Listed:
  • Viput Ongsakul
  • Pattanaporn Chatjuthamard
  • Pornsit Jiraporn
  • Sang Mook Lee

Abstract

We examine the impact of innovation efficiency on shareholder value in the context of climate change, using the novel research quotient (RQ) metric. The adoption of the Paris Agreement provides a unique setting to assess the effect of R&D productivity on stock market reactions. Our findings reveal that lower innovation efficiency, as measured by RQ, positively impacts cumulative abnormal returns (CARs) around the Paris Agreement's adoption. This suggests that firms starting from a lower baseline of innovation efficiency have greater potential for improvement and stand to gain significantly more from the Paris Agreement's climate‐related incentives and support. In particular, a decline in innovation efficiency by one standard deviation improves the stock market reactions by 8.7%–9.9%. Also, we find that firms with stronger governance and higher profitability can further leverage these benefits, enhancing the positive market reactions to the Paris Agreement.

Suggested Citation

  • Viput Ongsakul & Pattanaporn Chatjuthamard & Pornsit Jiraporn & Sang Mook Lee, 2025. "Climate Change, Innovation Efficiency, and Shareholder Wealth: Insights From the Paris Agreement," Business Strategy and the Environment, Wiley Blackwell, vol. 34(5), pages 6304-6324, July.
    • Handle: RePEc:bla:bstrat:v:34:y:2025:i:5:p:6304-6324
    DOI: 10.1002/bse.4272
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/bse.4272
    Download Restriction: no
    File URL: https://libkey.io/10.1002/bse.4272?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:bstrat:v:34:y:2025:i:5:p:6304-6324. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-0836 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.