The Role of Management in the Firm-Level Relationship between Green Innovation and Environmental and Financial Performance

This study investigates the relationship between green innovation (measured by Y02 patent data), environmental performance (measured by GHG emissions), and financial performance (measured by Tobin's Q) in European companies for the years 2017 to 2021. Additionally, the study explores the moderating role of companies' top-level management characteristics, particularly board gender diversity in the aforementioned relationships. The findings reveal that green innovation is associated with a reduction in GHG emissions and an increase in Tobin's Q, indicating improved environmental and financial performance. Board gender diversity strengthens the negative relationship between green innovation and GHG emissions but does not exhibit a significant effect on the relationship between green innovation and Tobin's Q. The results contribute to the literature by offering insights into the impact of green innovation in European companies, highlighting the relevance of board gender diversity, and utilizing Y02 patent classification for identifying and measuring green innovation.