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Green Regulation and Stock Price Reaction to Green Bond Issuance

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  • Dejan Glavas

Abstract

This paper shows how changes in regulatory pressure impact the way equity investors react to green bond issuance announcements. We find a positive stock price reaction to green bond issuance announcements compared to that of conventional bond issuance announcements. Based on our analysis, this positive reaction increased in size and statistical significance after the Paris Agreement. Our results suggest that one determinant of this reaction is that investors expected climate-related regulations following such an agreement and, therefore, placed greater value on the ?green? flag of the bond issuance.

Suggested Citation

  • Dejan Glavas, 2020. "Green Regulation and Stock Price Reaction to Green Bond Issuance," Finance, Presses universitaires de Grenoble, vol. 41(1), pages 7-51.
    • Handle: RePEc:cai:finpug:fina_411_0007
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    Cited by:

    1. Silva, Florinda & Ferreira, André & Cortez, Maria Céu, 2024. "The performance of green bond portfolios under climate uncertainty: A comparative analysis with conventional and black bond portfolios," Research in International Business and Finance, Elsevier, vol. 70(PA).
    2. Baldi, Francesco & Pandimiglio, Alessandro, 2022. "The role of ESG scoring and greenwashing risk in explaining the yields of green bonds: A conceptual framework and an econometric analysis," Global Finance Journal, Elsevier, vol. 52(C).

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