The Information Content of Green Innovations: U.S. Evidence

The study examines whether corporate green innovation enhances the information content of stock prices among U.S. publicly listed firms from 1997 to 2023. Using green patent data from the United States Patent and Trademark Office, we find that firms engaging in green innovation exhibit significantly lower stock price synchronicity, indicating greater firm-specific information reflected in their prices. This finding is robust to alternative innovation measures, the lead dependent variable, the exclusion of the COVID-19 period, and the propensity score matching with Rosenbaum bounds sensitivity analysis. Exploiting the 2018 America’s Water Infrastructure Act as an exogenous regulatory shock, we find that the informativeness effect is substantially expanded following the shock. Citation-based analyses confirm that higher-quality green patents generate a stronger impact after adjusting for truncation bias. We identify analyst coverage and institutional ownership as two economic mechanisms through which green innovation improves the corporate information environment. Our findings suggest that green innovation represents a valuable source of firm-specific information content with meaningful implications for capital market efficiency.