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Green funds and green innovation in family firms: A perspective of long-term value congruence

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  • Yang, Ge
  • Tan, Zelong
  • Zhao, Yiyi

Abstract

We investigate the heterogeneous impact of green fund investments on investee firms’ green innovation activities. Drawing on the theory of long-term value congruence, we find that the shared value of long-term orientation between green fund investors and investee family firms leads to more green innovation than non-family firms. This positive effect is more pronounced when family firms, green funds or both display stronger long-term orientation characteristics. The outperformance of value-congruent investments is also evidenced by the higher quality of green innovation following green fund investments in family firms. Our additional analysis reveals that green funds make more on-site visits to family firm, suggesting that long-term value congruence facilitates effective communication and alignment of interests, ultimately enhancing the environmental performance of green fund investments. Lastly, we document that the impact of green fund investments on family firms’ green innovation is more pronounced in heavy-polluting inddustries. Overall, our evidence provides insights into strategies for improving the environmental performance of green fund investment through the careful selection of investee firms.

Suggested Citation

  • Yang, Ge & Tan, Zelong & Zhao, Yiyi, 2026. "Green funds and green innovation in family firms: A perspective of long-term value congruence," Research in International Business and Finance, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:riibaf:v:81:y:2026:i:c:s0275531925004180
    DOI: 10.1016/j.ribaf.2025.103162
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    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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