Colloquium: CEO Equity Pay and Green Innovation: The Role of Firm Value

Abstract: 
This study examines whether firm value mitigates the negative influence of CEO stock-pay (where CEOs are compensated based on share price) on green innovation. Using an international sample from 2016 to 2023 and ordinary least squares regression, we find that firm value positively moderates the association between CEO stock-pay and green innovation, suggesting that strong market position offers a monitoring mechanism to mitigate the negative influence of CEO stock-pay. In the presence of CEO stock-pay, managers may consider strategies for enhancing market value to increase eco-innovation. In relation to policymakers, the study suggests that regulators should focus on market mechanisms which may enhance market value rather than solely focusing on restricting CEO stock-pay.