Corporate Green Patenting and Bond Rating Splits: Evidence from Korea

Credit rating disagreement among credit rating agencies (CRAs) stems from information asymmetry, increasing uncertainty for investors and financing costs for firms. While prior research has examined whether environmental, social, and governance (ESG) factors reduce such disagreement, most rely on self-reported or qualitative indicators that lack verification. This study focuses on green patents as observable and costly signals of genuine environmental innovation. Grounded in signaling theory, this study argues that green patents provide credible information about firms’ commitment to sustainability, thereby promoting more consistent credit assessments across agencies. Using data on non-financial firms listed on the Korea Exchange from 2011 to 2022, this study estimates logit and ordered logit models to test whether green patenting mitigates rating disagreement. The results show that firms with more green patents experience fewer rating splits, and this effect is stronger among carbon- and energy-intensive firms. Robustness tests using propensity score matching confirm that the findings are not driven by firm-level selection bias. Rather than relying on broad ESG indicators such as environmental certifications or green investments, this study emphasizes green patents as verifiable and credible signals of sustainability, highlighting their informational value in enhancing credit rating consistency and transparency.