Green Technology Innovation Premium: Evidence from New Energy Vehicle Industry in China

Climate change and environmental issues have received increasing attention across the world. China's governmental targets for carbon peak and carbon neutralization show the ambition and efforts necessary in challenging these problems. The transportation industry will be crucial in reducing carbon emissions. Based on the green patent application data in China's new energy vehicle (NEV) industry from 2006 to 2021, this article focuses on risk premium of green technology innovation. In particular, the premium effects of the green technology innovation and the cooperative network are empirically examined. Furthermore, two channels that play a role in generating the premium are investigated, i.e., attracting market attention and reducing financing constraints. The empirical results show that the stock returns are positively correlated to the green technology innovation and the company's central position in the cooperative network, i.e., there exist the premium effects of green technology innovation in China's NEV industry. The positional advantage in the cooperative innovation network can further increase analyst following and reduce financing constraints. The research can provide evidence and policy implications for the government, companies and investors.