How eco-efficiency intensity and GHG emissions condition the capitalization of R&D in value creation: Evidence from the S&P 500

This study examines how R&D capitalization, eco-efficiency intensity, and greenhouse gas (GHG) emissions interact in shaping corporate value creation among S&P 500 firms. Using financial and environmental data from Bloomberg over the period 2010–2024, the analysis employs complementary econometric approaches to assess both direct and moderating effects. The results show that R&D capitalization has a positive and significant impact on value creation, while eco-efficiency intensity strengthens this relationship by enhancing resource productivity. In contrast, higher GHG emissions weaken the value relevance of R&D investments, suggesting that environmental inefficiencies reduce the effectiveness of innovation strategies. These findings highlight the critical role of integrating sustainability metrics into financial decision-making. The study contributes to the literature by providing empirical evidence on the conditional effects of environmental performance on the R&D–value creation nexus, offering relevant implications for investors, managers, and policymakers. Sustainable economic growth requires firms to integrate innovation and environmental responsibility as complementary pillars of competitiveness. This study analyzes the interaction between research and development (R&D) capitalization, eco-efficiency, and greenhouse gas (GHG) emissions in shaping corporate value creation. Using data from S&P 500 firms between 2010 and 2024, the findings reveal that R&D capitalization exerts a strong and direct positive effect on value creation, while this effect is significantly amplified when firms simultaneously achieve emission reductions and higher levels of eco-efficiency. Consequently, the evidence demonstrates that environmental sustainability and financial performance are not conflicting objectives but interdependent dimensions that reinforce one another. These results hold significant implications for investors, regulators, and society by underscoring the urgency of stronger regulatory frameworks, standardized eco-efficiency metrics, and transparent sustainability disclosures. These implications are derived from the observed sensitivity of value creation to how environmental performance is operationalized, rather than from a direct evaluation of disclosure quality or reporting inconsistencies. In sum, the findings confirm that reducing environmental impact constitutes a viable competitiveness strategy and a critical component of the global green transition.