Green research and development (R&D) investment and its impact on the market value of firms: evidence from South African mining firms

Abstract

The importance of global corporate green research and development (R&D) investment is gaining momentum and South Africa is no exception. This paper examines growing economic perceptions that green financial and stock-market systems result in heightened corporate hyperopia and therefore increase long-term and future green investment associated with R&D. It reports on the findings of a survey of 14 South African mining firms listed on the Johannesburg Stock Exchange SRI index. The study found, that, these firms’ market value showed a positive association with Green R&D. It also revealed increased Green R&D activity among large mining firms in the country and that they are highly likely to maintain their level of such investment in the coming years. The study's outcomes thus add to the body of empirical knowledge on firm hyperopia in relation to corporate greening initiatives.

Keywords:

• green research and development (R&D) investment
• market value
• cash flow
• growth
• risk
• South African mining firms

Acknowledgements

The author of this paper wishes to acknowledge the two anonymous reviewers for their constructive comments.

Disclosure statement

No potential conflict of interest was reported by the author.