Essays on Green Innovation and Corporate Finance

This dissertation examines how financial markets shape corporate behavior in the context of climate change, with a particular emphasis on innovation strategies. As climate-related risks become increasingly integrated into financial decision-making, firms face growing pressure from investors and institutions to align their strategic choices with environmental sustainability objectives. The three empirical essays that constitute the thesis investigate the mechanisms through which financial markets drive companies toward green innovation and climate-responsive transformations. The first chapter analyzes the role of shareholders in promoting green innovation by linking executive compensation with sustainability targets. The second chapter investigates the link between changes in investors’ perception of climate risk and firm-level green innovation, particularly process-related, highlighting the importance of considering how these risks propagate along the value chain. The third chapter develops a novel index of corporate circularity based on textual analysis of non-financial disclosures from Italian listed companies to measure the attention that firms give to the Circular Economy.