Do shareholders benefit from green bonds?

By D. Tang, Yupu Zhang. Journal of Corporate Finance, 2018

946 citations recorded by the source corpus.

Abstract The green bond market has been growing rapidly worldwide since its debut in 2007. We present the first empirical study on the announcement returns and real effects of green bond issuance by firms in 28 countries during 2007–2017. After compiling a comprehensive international green bond dataset, we document that stock prices positively respond to green bond issuance. However, we do not find a consistently significant premium for green bonds, suggesting that the positive stock returns around green bond announcements are not fully driven by the lower cost of debt. Nevertheless, we show that institutional ownership, especially from domestic institutions, increases after the firm issues green bonds. Moreover, stock liquidity significantly improves upon the issuance of green bonds. Overall, our findings suggest that the firm's issuance of green bonds is beneficial to its existing shareholders.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/5bb37ab8def3910a5fb61c4d7367bc6df875575f

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Citations in the corpus

Firms and social responsibility: A review of ESG and CSR research in corporate finance (2021, background): “Tang and Zhang (2018) examine whether the issuance of green bonds is beneficial to a firm’s existing shareholders.”
The pricing of green bonds: Are financial institutions special? (2019, neutral): “The effects of green bond issuance have been further investigated in Tang and Zhang (2018) and Flammer (2018). Tang and Zhang (2018) find a positive”
Green bonds as a tool against climate change? (2021, positive): “Tang and Zhang (2020) and Flammer (2021) find that corporate green bond issuances are followed by positive stock market reactions and help attract an investor clientele that values the long term and the environment.”