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Does green bond issuance affect stock price crash risk? Evidence from China

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  • Zhang, Yuyao
  • Li, Yinuo
  • Chen, Xingyu

Abstract

This paper investigates the impact of green bond issuance on stock price crash risk and the mediating roles of information asymmetry and financing constraints by utilizing data of Chinese listed firms from 2014 to 2021. It is empirically tested that green bond issuance can significantly reduce stock price crash risk based on difference-in-differences (DID) methods. Our mechanism analysis shows that green bond issuance decreases stock price crash risk by addressing information asymmetry and alleviating financing constraints. Moreover, the reduction effect is more pronounced among firms in polluting industries and firms with non-SOEs ownership types. This paper provides a new perspective on stock market risk prevention.

Suggested Citation

  • Zhang, Yuyao & Li, Yinuo & Chen, Xingyu, 2024. "Does green bond issuance affect stock price crash risk? Evidence from China," Finance Research Letters, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:finlet:v:60:y:2024:i:c:s1544612323012801
    DOI: 10.1016/j.frl.2023.104908
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    References listed on IDEAS

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    Cited by:

    1. Yuan, Mingqing, 2024. "Beyond green bonds: Stock market reactions to ESG bond announcements and issuances in Japan," MPRA Paper 120943, University Library of Munich, Germany.
    2. Naresh Gopal & Ravi S. Mateti & Duong Nguyen & Gopala Vasudevan, 2024. "Stock buybacks and growth opportunities," Review of Quantitative Finance and Accounting, Springer, vol. 63(4), pages 1413-1429, November.

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