Corporate Green Bond Issuances: An International Evidence

Martin Lebelle · Souad Lajili Jarjir · Syrine Sassi

124 citations0/0 files storedJournal of risk and financial management

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Sustainable Finance and Green Bonds Financial Markets and Investment Strategies Credit Risk and Financial Regulations

Abstract

Using an international sample of corporate Green bond issuances over the recent period, this paper highlights the potential consequences of the issuance of a Green bond on the issuer’s financial performance. Starting with a first sample of 2079 Green bond issuances of 190 unique issuers from 2009 to 2018, we investigate only corporate green bond issuances. Our final sample contains 475 green bonds issued by 145 unique firms. We find that the market reacts negatively to the announcement of green bond issuances. In particular, results show that the stock market reacts on the day of the green bond announcement date and the day after, and that the cumulative abnormal return is between −0.5% and −0.2%, depending on the asset pricing model (CAPM, the 3-factor Fama and French models, and the 4-factor Carhart models). This effect is mainly noticeable at the first Green Bond issuance and in developed markets. Our results provide evidence that the investors react in the same manner for Green bonds as for conventional or convertible bonds. This evidence suggests that green debt offerings convey unfavorable information about the issuing firms.

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References

1993Common risk factors in the returns on stocks and bonds 1997On Persistence in Mutual Fund Performance 2018The effect of pro-environmental preferences on bond prices: Evidence from green bonds 2018Do Shareholders Benefit from Green Bonds?2019Where's the Greenium?2018Are green bonds priced differently from conventional bonds?2018Financing the Response to Climate Change: The Pricing and Ownership of U.S. Green Bonds 1984Convertible debt issuance, capital structure change and financing-related information

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