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Articles 1 - 30 of 373
Full-Text Articles in Corporate Finance
Human Capital Disclosure And Labor Market Outcomes: Evidence From Regulation S-K, Jung Ho Choi, Dan Li, Daniele Macciocchi
Human Capital Disclosure And Labor Market Outcomes: Evidence From Regulation S-K, Jung Ho Choi, Dan Li, Daniele Macciocchi
Research Collection School Of Accountancy
We examine the labor market consequences of the 2020 Regulation S-K requiring human capital disclosure in 10K filings. Using large-sample job-level data and a Generative Large Language Model (GLLM), we observe that public firms subject to the regulation increase their disclosure of diversity, equity, and inclusion (DEI) information in job postings relative to a matched sample of large private firms. The increase in job-posting disclosure is more pronounced among firms facing greater external pressure to increase their workforce diversity. These findings suggest a shift in demand for diverse candidates by public firms following the regulation. Yet, consistent with short-term inelastic …
Beyond Earnings Quality: Evaluating The Quality Of Corporate Disclosure Practices, Patricia M. Dechow, Weili Ge, Wei Ting Loh
Beyond Earnings Quality: Evaluating The Quality Of Corporate Disclosure Practices, Patricia M. Dechow, Weili Ge, Wei Ting Loh
Research Collection School Of Accountancy
We propose a framework to assess the decision-usefulness of heterogeneous disclosure practices that managers use to convey information to market participants. We illustrate an application of our framework to non-GAAP earnings, management earnings guidance, and earnings conference calls. We first identify key quality attributes for each disclosure practice and then develop a list of quality metrics that we apply to a small pilot sample. We focus on metrics that are easily measured in real time and discuss the practical challenges of conducting assessments of disclosure quality at the firm-quarter-disclosure level. Our descriptive analysis provides preliminary insights into whether and how …
The Due Diligence That Investors In Family Businesses Must Not Skip, Yuanto Kusnadi, Kenneth T. Goh
The Due Diligence That Investors In Family Businesses Must Not Skip, Yuanto Kusnadi, Kenneth T. Goh
Research Collection School Of Accountancy
In a commentary, SMU Associate Professor of Accounting (Education) Yuanto Kusnadi and Kenneth Goh, Director of Private Wealth Management at UOB Kay Hian, opined that minority shareholders should understand the specific risks highlighted in company filings. They noted that the greatest risk of investing in a family-controlled company lies not only in its business performance, but also in how controlling families exercise their influence. While Singapore's regulatory framework provides safeguards for minority shareholders, these protections are not foolproof. However, they require significant transactions to be disclosed and give minority shareholders a voice, provided they review the circulars and exercise their …
Conference Calls And Information Spillover: The Role Of Analyst Participation, Amanda Awyong, Young Jun Cho, Holly I. Yang
Conference Calls And Information Spillover: The Role Of Analyst Participation, Amanda Awyong, Young Jun Cho, Holly I. Yang
Research Collection School Of Accountancy
We examine the role of conference calls in creating information spillover within firms. We find that analyst participation in conference calls is positively associated with subsequent revisions in management forecasts, consistent with analysts' questions prompting managers to collect additional information. We find that this effect strengthens when analysts pose more questions on new topics and when they ask questions with abnormally positive or negative tones. We also find that analyst participation has greater effects when analysts have more experience and higher forecasting ability. Further analyses demonstrate that analyst participation is associated with higher accuracy in subsequently revised forecasts. Overall, our …
Attention To Detail: How Do Information Users Process Exhibits In Form 10-K?, Stephanie F. Cheng, Yimeng Li, Pengkai Lin
Attention To Detail: How Do Information Users Process Exhibits In Form 10-K?, Stephanie F. Cheng, Yimeng Li, Pengkai Lin
Research Collection School Of Accountancy
Form 10-K offers a setting for studying how users process complex, multi-layered disclosures: managerial narratives in the main file alongside separate exhibits, such as contracts and certifications, that provide unfiltered detail. Drawing on rational inattention theory, we investigate how users allocate limited attention across these components. Users typically begin with the main file and selectively access exhibits when the main file appears shorter, less readable, or less confident, indicating higher perceived information loss. This pattern strengthens for exhibits that offer more detail on topics discussed in the main file and among institutional investors and time-constrained users. Exhibit access persists beyond …
Corporate Response To The Black Lives Matter Movement: Determinants Of Speaking Out In Support Of Social Causes, A. J. Yuan Chen, Patricia M. Dechow, Samuel T. Tan
Corporate Response To The Black Lives Matter Movement: Determinants Of Speaking Out In Support Of Social Causes, A. J. Yuan Chen, Patricia M. Dechow, Samuel T. Tan
Research Collection School Of Accountancy
We document that firms vary in their timeliness of support for the Black Lives Matter (BLM) movement following the death of George Floyd in May 2020, and that timeliness is an indicator of authenticity. We predict that firms that speak out quickly in support of BLM (via Twitter or their websites) have made more investments in diversity and inclusion, relative to firms that speak out slowly (via conference calls or annual reports) or that remain silent. Consistent with this prediction, quick-disclosing firms have greater workforce diversity, have boards with greater ethnic diversity, and are more likely to tie executive compensation …
Can Financial Literacy Enhance Esg Disclosures?, Xiaoran Jia, Kiridaran Kanagaretnam, Kiat Bee Jimmy Lee, Chee Yeow Lim
Can Financial Literacy Enhance Esg Disclosures?, Xiaoran Jia, Kiridaran Kanagaretnam, Kiat Bee Jimmy Lee, Chee Yeow Lim
Research Collection School Of Accountancy
Using an international sample of firms and two country-level measures of financial literacy, we find robust evidence of a positive relation between financial literacy and firms' Environmental, Social and Governance (ESG) disclosures. In cross-sectional analyses, we find that the effect of financial literacy in enhancing ESG disclosures is more prominent in poorer information environments, weaker legal institutions and weaker ESG reporting environments. Lastly, we find that financial literacy also enhances ESG performance. Our study contributes to and extends the literature by providing strong evidence that citizens' financial literacy enhances firms' ESG disclosure and the associated ESG performance.
Institutional Cross-Ownership Of Peer Firms And Revelatory Price Efficiency, Young Jun Cho, Holly I. Yang, Yue Zhao
Institutional Cross-Ownership Of Peer Firms And Revelatory Price Efficiency, Young Jun Cho, Holly I. Yang, Yue Zhao
Research Collection School Of Accountancy
We argue that cross-ownership increases the amount of private information in stock price, enhancing the ability of stock price to provide feedback to managers. Consistent with this argument, we find greater cross-ownership heightens a firm’s investment-q sensitivity. This effect is stronger for firms with a lower propensity for voluntary disclosure and for firms whose managers hold less private information. Furthermore, we find that cross-ownership is negatively associated with the sensitivity of a firm’s investment to its peers’ stock prices. Additionally, cross-ownership has a stronger impact on the investment-q sensitivity when measured among investors who trade more actively the firm’s shares. …
Xbrl-Formatted Financial Reporting And The Feedback Effect Of Price, Young Jun Cho, Ying-Chi Huang, Holly I. Yang
Xbrl-Formatted Financial Reporting And The Feedback Effect Of Price, Young Jun Cho, Ying-Chi Huang, Holly I. Yang
Research Collection School Of Accountancy
We examine whether the SEC’s XBRL-formatted financial reporting mandate allows investors to better process public financial information, reducing the extent to which managers learn private information from stock price. We find a significant decrease in the investment-price sensitivity for firms that started to file their 10-Ks in an XBRL format, consistent with a reduction in the cost of information processing crowding out private information in stock price. We also find that the decrease in the investment-price sensitivity associated with XBRL adoption is more pronounced for firms with higher business and information complexity and for firms with higher incentives for managers …
Non-Audit Services And Knowledge Spillover: Evidence From Audit Hours And Billing Rates, Jaeyoon Yu, Yongsuk Yun, Yoonseok Zang
Non-Audit Services And Knowledge Spillover: Evidence From Audit Hours And Billing Rates, Jaeyoon Yu, Yongsuk Yun, Yoonseok Zang
Research Collection School Of Accountancy
Using audit hours from firms listed on the Korea Exchange as a direct proxy for audit effort, this study examines whether non-audit services (NAS) purchased from audit firms improve audit efficiency. Our results reveal that the ratio of NAS fees to total fees paid to audit firms is associated with lower audit hours and audit fees, but it is not significantly related to audit billing rates. The reduction in audit effort associated with NAS is more pronounced when NAS provided are audit-related, and for clients who hire Big 4 auditors, have short-tenured auditors, and report a profit. Further, using path …
Prosocial Ceos And Accounting Manipulation, Mei Feng, Weili Ge, Zhejia Ling, Wei Ting Loh
Prosocial Ceos And Accounting Manipulation, Mei Feng, Weili Ge, Zhejia Ling, Wei Ting Loh
Research Collection School Of Accountancy
This paper examines the association between chief executive officers’ (CEOs’) prosocial tendency and their firms’ likelihood of accounting manipulation. We measure CEOs’ prosocial tendency based on their involvement with charitable organizations. We find that prosocial CEOs are less likely to engage in accounting manipulation, as proxied by material non-reliance restatements and SEC or DOJ enforcement actions. The effect is more pronounced when CEOs are involved with charities that directly aim to improve the welfare of others and when they face stronger incentives to misreport. These results continue to hold in analyses of changes in CEOs’ prosocial tendency around turnover events. …
Does Auditor Quality Enhance Csr Disclosure?, Jimmy Lee, Chee Yeow Lim, Gerald J. Lobo, Yanping Xu
Does Auditor Quality Enhance Csr Disclosure?, Jimmy Lee, Chee Yeow Lim, Gerald J. Lobo, Yanping Xu
Research Collection School Of Accountancy
We investigate the relation between auditor quality and client firms’ corporate social responsibility (CSR) disclosure. Using an international sample of firms from 36 countries over the period 2009–2018 and a measure of the extent of CSR disclosure from Bloomberg, we find strong evidence that client firms with higher quality auditors provide more CSR disclosure. In cross-sectional analyses, we show that the relation between auditor quality and CSR disclosure is accentuated when the information environment is poorer and when the financial reporting environment and the legal institutions are weaker. Lastly, we document that firms with higher quality auditors also exhibit better …
Freedom Of Expression Protection And Corporate Concealment Of Bad News: Evidence From State Anti-Slapp Laws, Jimmy Lee, Shaphan Ng, Il Sun Yoo, Liandong Zhang
Freedom Of Expression Protection And Corporate Concealment Of Bad News: Evidence From State Anti-Slapp Laws, Jimmy Lee, Shaphan Ng, Il Sun Yoo, Liandong Zhang
Research Collection School Of Accountancy
The protection of free speech enhances the ability of various public stakeholders to disseminate privately observed adverse information about public firms, making it difficult for corporate managers to conceal negative information about their companies. Using the staggered enactment of anti strategic lawsuit against public participation (anti-SLAPP) laws across U.S. states as a shock that strengthens free speech protection, we show that stronger protection is associated with less concealment of bad news. This is evidenced by a lower likelihood of stock price crashes, a decreased probability of accounting fraud, and an increased frequency of firm-initiated negative press releases. These results are …
Peer Effects Of Corporate Disclosures: Evidence From The Registration-Based Ipo System In China, Ruilin Liu, Beng Wee Goh, Dan Li, Zheyuan Zhang
Peer Effects Of Corporate Disclosures: Evidence From The Registration-Based Ipo System In China, Ruilin Liu, Beng Wee Goh, Dan Li, Zheyuan Zhang
Research Collection School Of Accountancy
China launched the registration-based IPO system in 2019 whereby all firms listed on the newly established STAR board (“peer firms”) are required to disclose specific innovation and industry-related information in their prospectus. Using this event as a quasi-experiment, our study investigates the causal effects of peer firms’ disclosures on individual firms’ disclosure strategy. We find that individual firms’ management earnings forecast (MEF) precision, both its form and width, significantly decreases when peer firms disclose more information during the IPO period. In cross-sectional analyses, we find this effect to be more pronounced for individual firms that are likely to experience greater …
Discussion Of "Csr And Negative Corporate Events: The Moderating Role Of Managerial Overconfidence", Hye Sun Chang
Discussion Of "Csr And Negative Corporate Events: The Moderating Role Of Managerial Overconfidence", Hye Sun Chang
Research Collection School Of Accountancy
Corporate social responsibility (CSR) refers to the notion that firms are accountable not only to shareholders but also to a broader set of stakeholders including customers, employees, creditors, and the communities in which they operate. Although CSR has long been part of corporate discourse, its prominence has grown with the rise of environmental, social, and governance (ESG) concerns. Today’s consumers and stakeholders are increasingly attentive to issues such as climate change, economic inequality, labor rights, and social justice, prompting firms to align their strategies with evolving societal expectations. Building on this increasingly salient backdrop, Chu et al. (2026), hereafter CCT, …
Commentary: Delayed Climate Reporting Requirements Threaten Singapore’S Sustainability Leadership, Jiwei Wang, Holly I. Yang, Liandong Zhang
Commentary: Delayed Climate Reporting Requirements Threaten Singapore’S Sustainability Leadership, Jiwei Wang, Holly I. Yang, Liandong Zhang
Research Collection School Of Accountancy
In a commentary by SMU Professor of Accounting (Practice) and Director of Master of Professional Accounting (MPA) and Master of Science in Accounting (MSA) programmes Wang Jiwei, SMU Associate Professor of Accounting, Lee Kong Chian Fellow and Co-Director (Academic Research) of the School of Accountancy Research Centre (SOAR) Holly Yang, and SMU Dean of School of Accountancy and Lee Kong Chian Professor of Accounting Zhang Liandong, they suggested that delaying climate disclosure requirements for small and mid-sized enterprises (SMEs) from 2025 to 2030 could weaken Singapore’s sustainable finance leadership, despite regulators saying the extension would help smaller firms build environmental, …
Blue Bird: Building The Right Path, Yuanto Kusnadi, Wee Kiat Lim
Blue Bird: Building The Right Path, Yuanto Kusnadi, Wee Kiat Lim
Research Collection School Of Accountancy
How Indonesia's leading mobility provider pursued twin transformations involving sustainable growth and digitalisation.
How Do Analysts Affect Corporate Innovation? Evidence From Site Visits, Qiang Cheng, Brian Yutao Wang, Holly I. Yang, Zheyuan Zhang
How Do Analysts Affect Corporate Innovation? Evidence From Site Visits, Qiang Cheng, Brian Yutao Wang, Holly I. Yang, Zheyuan Zhang
Research Collection School Of Accountancy
While prior studies have examined whether financial analysts affect corporate innovation, there is little research on the mechanism through which this occurs. In this paper, we examine whether and how analysts' questions about innovation during site visits affect corporate innovation. Using a sample of corporate site visits in China, we find that when analysts ask questions about innovation during site visits, firms invest more in R&D in the future. Consistent with knowledge diffusion across firms, this association is stronger when analysts cover more firms in the same industry, when firms share similar technologies as industry peers, and when an innovation-expert …
Economic Consequences Of Public Pension Accounting Regulation Changes: Evidence From Housing Markets And Local Economies, Grace Haoqing Fan
Economic Consequences Of Public Pension Accounting Regulation Changes: Evidence From Housing Markets And Local Economies, Grace Haoqing Fan
Research Collection School Of Accountancy
I examine whether, and through which channels, government pension accounting regulations affect local housing markets and economies. Using both a contiguous border-county approach across multiple states and a single-state study in California, I find that regions exposed to more severe state-level pension underfunding experience lower housing market growth after the introduction of Government Accounting Standards Board (GASB) regulations 67 and 68, which significantly enhance the transparency of public pension underfunding. The effect is more pronounced in states heavily impacted by the new regulations and in counties more reliant on state funding. Further analyses suggest that the observed effect is driven …
Misinformation Regulations: Early Evidence On Corporate Social Media Strategy, Richard M. Crowley, Yun Lou, Samuel T. Tan, Liandong Zhang
Misinformation Regulations: Early Evidence On Corporate Social Media Strategy, Richard M. Crowley, Yun Lou, Samuel T. Tan, Liandong Zhang
Research Collection School Of Accountancy
Against the backdrop of an increasing threat of misinformation on social media, several countries have enacted regulations to curb the spread of misinformation. This study examines how corporate social media strategy responds to misinformation regulations. Using a large cross-country dataset of corporate tweets and a stacked regression analysis, we show that misinformation regulations lead to less corporate social media disclosure. This result suggests that by deterring misinformation, these regulations reduce firms’ need to use social media to counteract its adverse effects. Additional analyses show that the effect is more pronounced among countries with higher social media usage and countries with …
Individual Or Team Analyst Reports? The Organization Of Analyst Research Activities, Xia Chen, Ning Jia, Dan Wang
Individual Or Team Analyst Reports? The Organization Of Analyst Research Activities, Xia Chen, Ning Jia, Dan Wang
Research Collection School Of Accountancy
Given the importance of research resource allocation within brokerage firms, we examine key factors that influence the issuance of individual vs. team analyst reports. Using a comprehensive sample of analyst reports from China for the 2008-2021 period, we find that this decision is influenced by (1) the brokerage firm's client interests, whereby firms held by the brokerage firm's mutual fund clients and firms that are the brokerage firm's underwriting clients receive more team than individual reports from the brokerage firm, and (2) the nature of corporate events, whereby routine events receive more team reports and nonroutine events receive more individual …
Bogging Down Investors: An Unintended Consequence Of Litigation Risk, Siwen Fu, Ke Wang, Liandong Zhang, Liu Zheng
Bogging Down Investors: An Unintended Consequence Of Litigation Risk, Siwen Fu, Ke Wang, Liandong Zhang, Liu Zheng
Research Collection School Of Accountancy
Securities litigation risk is a well-recognized yet underexplored source of financial reporting complexity or unreadability. This study examines the effect of litigation risk on the readability of corporate financial reports. The 1999 Silicon Graphics Inc. (SGI) court ruling unexpectedly reduced litigation risk for firms within the Ninth Circuit Court's jurisdiction. Using a difference-in-differences design centered on the SGI court ruling, we find that, while the readability of financial reports generally declines over the sample period, treated firms in the Ninth Circuit experience a comparatively smaller decline in readability than control firms in other states after the ruling. Put differently, treated …
Institutional Dual-Holders And Corporate Disclosures: A Natural Experiment, Lin Cheng, Qiang Cheng, Liwei Weng, Mark Yuzhi Yan
Institutional Dual-Holders And Corporate Disclosures: A Natural Experiment, Lin Cheng, Qiang Cheng, Liwei Weng, Mark Yuzhi Yan
Research Collection School Of Accountancy
This study examines the impact of the presence of institutional dual-holders, whose portfolios hold both loans and equity securities of the same firms, on those firms' voluntary disclosures. Using mergers between institutional shareholders and lenders to the same firms as exogenous shocks to identify firms with institutional dual-holders that have high relative equity ownership, we document that such firms are less likely to provide management forecasts and disclose fewer voluntary 8-K items. In cross-sectional analyses, we find that the reduction in voluntary disclosures is more pronounced when institutional dual-holders have higher board representation and when firms have lower litigation risk. …
A Rating System To Evaluate Non-Gaap Exclusion Quality, Patricia M. Dechow, Wei Ting Loh, Annika Yu Wang
A Rating System To Evaluate Non-Gaap Exclusion Quality, Patricia M. Dechow, Wei Ting Loh, Annika Yu Wang
Research Collection School Of Accountancy
We develop a rating system to evaluate the quality of individual non-GAAP exclusions. Our perspective is that high-quality exclusions reflect nonrecurring economic transactions, are transitory accounting adjustments, or have little usefulness in forecasting cash flows. We use four approaches to rate exclusions. We evaluate the serial correlation of the exclusion, survey accounting academics’ views, obtain practitioner ratings from the CFA Institute, and identify the exclusions approved by the Chinese securities regulator. A firm’s exclusion quality score is the weighted average rating of its individual exclusions. For our sample of S&P 500 firms, we document that exclusion quality varies by industry, …
How Do Institutional Investors Facilitate Reporting Comparability? Evidence From Common Institutional Ownership In The United States, Xuanbo Li, Yun Lou, Rencheng Wang, Kaitang Zhou
How Do Institutional Investors Facilitate Reporting Comparability? Evidence From Common Institutional Ownership In The United States, Xuanbo Li, Yun Lou, Rencheng Wang, Kaitang Zhou
Research Collection School Of Accountancy
We examine how common institutional investors (CIIs) facilitate the financial reporting comparability (FRC) of US firms. Common ownership increases FRC of firms that are directly owned by CIIs (via a direct effect) and has positive spillover effects on other firms in the same industry. We find spillover effects in two types of firms: (1) those that are commonly owned by different institutional investors but are connected through common firms, and (2) those that do not have any common ownership. These results suggest that the effect of common ownership goes beyond commonly owned firms and extends to non-commonly owned firms. Furthermore, …
Institutional Cross-Ownership Of Peer Firms And Revelatory Price Efficiency, Young Jun Cho, Holly I. Yang, Yue Zhao
Institutional Cross-Ownership Of Peer Firms And Revelatory Price Efficiency, Young Jun Cho, Holly I. Yang, Yue Zhao
Research Collection School Of Accountancy
We argue that cross-ownership increases the amount of private information in stock price, enhancing the ability of stock price to provide feedback to managers. Consistent with this argument, we find greater cross-ownership heightens a firm’s investment-q sensitivity. This effect is stronger for firms with a lower propensity for voluntary disclosure and for firms whose managers hold less private information. Furthermore, we find that cross-ownership is negatively associated with the sensitivity of a firm’s investment to its peers’ stock prices. Additionally, cross-ownership has a stronger impact on the investment-q sensitivity when measured among investors who trade more actively the …
Beyond The Disaster Zone: How Disruptive Climate Event Shape Epa Oversight And Firm Behavior, Grace Fan
Beyond The Disaster Zone: How Disruptive Climate Event Shape Epa Oversight And Firm Behavior, Grace Fan
Research Collection School Of Accountancy
We examine how experiences with disruptive climate events impact the Environmental Protection Agency’s (EPA) monitoring activities and subsequent firm behaviors. Using plausibly exogenous variation in the exposure of EPA regional offices to major hurricanes, we find that exposed EPA regulators increase their monitoring efforts, measured by both inspection frequency and length, at facilities located in their jurisdictions but outside the disaster zone. This effect diminishes over time and is stronger for regulators located closer to the disaster area or experiencing the disaster for the first time. Importantly, the heightened regulatory monitoring following disasters has real effects on regulated facilities–they face …
Unexpected Defaults: The Role Of Information Opacity, Aytekin Ertan, Yun Lee, Regina Wittenberg-Moerman
Unexpected Defaults: The Role Of Information Opacity, Aytekin Ertan, Yun Lee, Regina Wittenberg-Moerman
Research Collection School Of Accountancy
Bond defaults are undesirable yet natural outcomes of risky investments. What is also crucial but hitherto underexplored is the unexpectedness of defaults. We develop a parsimonious measure of default unexpectedness and highlight its economic importance by demonstrating that unexpected defaults are associated with unfavorable recovery outcomes and adverse price changes in peer firm bonds. We then examine how default unexpectedness relates to information opacity. We find that firms with opaque financial reporting and weak voluntary disclosure experience more unexpected defaults. Defaults also occur more unexpectedly when the external information environment is opaque—when rating agencies disagree on a firm’s credit risk …
Industry Peer Information And The Equity Valuation Accuracy Of Firms Emerging From Chapter 11, Bingxu Fang, Sasan Saiy, Dushyantkumar Vyas
Industry Peer Information And The Equity Valuation Accuracy Of Firms Emerging From Chapter 11, Bingxu Fang, Sasan Saiy, Dushyantkumar Vyas
Research Collection School Of Accountancy
Valuation plays a central role in determining Chapter 11 reorganization outcomes. However, obtaining accurate valuation estimates of reorganized firms is challenging because of limited firm-specific market-based information and the oft-conflicting incentives of claimholders. We examine the role of industry peer information in reducing misvaluations and its implications for unintended interclaimant wealth transfers and postreorganization performance. First, we find that the availability of relevant industry peer information is negatively associated with equity valuation errors for firms emerging from Chapter 11. Cross-sectional results suggest that the relation between industry peer information and valuation errors varies substantially with debtors’ information environment and case …
Green Innovation And Firms’ Financial And Environmental Performance: The Roles Of Pollution Prevention Versus Control, Qiang Cheng, An-Ping Lin, Mengjie Yang
Green Innovation And Firms’ Financial And Environmental Performance: The Roles Of Pollution Prevention Versus Control, Qiang Cheng, An-Ping Lin, Mengjie Yang
Research Collection School Of Accountancy
This study examines the effects of firms' green innovation on their future financial and environmental performance. If pollution is primarily a manifestation of wasted resources, then investments in pollution prevention technologies can both reduce the environmental impact of production and improve financial performance. In contrast, investments in pollution control technologies likely reduce the environmental impact of production without improving financial performance. Using green patents to capture firms' investments in these two types of technologies, we find that the value of a firm's pollution prevention patents is positively associated with its future financial and environmental performance, and that the positive impact …