Does green technology innovation matter to the cost of equity capital?

Using a panel of U.S. public firms, we present the first evidence highlighting the relation between green technology innovation and cost of equity capital. Consistent with our prediction, we find that greater green technology innovation is associated with lower cost of equity capital. Our results are statistically significant and economically important. Our findings are robust to a battery of sensitivity checks, including use of multiple estimation methods, alternative proxies of green innovation, various measures of cost of equity capital, and potential truncation problem.