Research & Development Intensity, Environmental Performance, and Firm Value: Unravelling the Nexus in the Energy Sector Worldwide

The lack of a focused study on the nexus of research & development (R&D) intensity, eco-friendly practices, firm value in the energy sector, and the stakeholders' concerns for ecology motivated us to realize this study. The study sample covers the period from 2002 to 2019, resulting in 4,016 firm-year observations affiliated with 43 countries. The data were retrieved from the Thomson Reuters Eikon, and a country-year fixed-effects regression analysis was executed. Our empirical findings are threefold. First, the results show that energy firms’ R&D intensity spurs eco-friendly practices in three dimensions, namely resource consumption reduction, emissions reduction, and eco-innovation. Second, our study revealed that corporate environmental performance could induce greater firm value, implying a positive shareholders’ reaction to the environmental engagement. Third, moderation analysis revealed that while R&D intensity’s interaction with eco-innovation is value-enhancing, its interaction with resource consumption reduction and emissions reduction is not. The results are largely robust to alternative sampling, endogeneity concerns, and alternative variables measurements. The findings suggest implications for energy firms, R&D activities, and capital markets.