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Bonds for a Bluer Tomorrow: Corporate climate concern and its impact on corporate bond maturities

Author

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  • Liang, Chao
  • Yang, Jinyu
  • Shen, Lihua
  • Toan Huynh, Luu Duc

Abstract

The study examines whether and how corporate climate concern (CCC) affects the maturity of corporate bonds. Based on the information in a company annual report’s management discussion and analysis (MD&A) section, we construct a corporate climate concern index using text analysis methods. The empirical findings indicate that CCC promotes the issuance of longer-term corporate bonds. The findings are robust to controlling for endogeneity issues, and using an alternative CCC measurement and alternative estimation models. A mechanism analysis explains the positive effect of CCC on corporate bond maturity as follows: companies with a high level of concern for climate issues are 1) more inclined to raise funds by issuing longer-term bonds to support their long-term climate management investment plans and 2) more likely to obtain approval for the issuance of longer-term bonds. In addition, we show that the positive effect of CCC on bond maturity is pronounced in firms in better financial conditions and with greater R&D investments.

Suggested Citation

  • Liang, Chao & Yang, Jinyu & Shen, Lihua & Toan Huynh, Luu Duc, 2025. "Bonds for a Bluer Tomorrow: Corporate climate concern and its impact on corporate bond maturities," Journal of International Money and Finance, Elsevier, vol. 153(C).
    • Handle: RePEc:eee:jimfin:v:153:y:2025:i:c:s0261560625000312
    DOI: 10.1016/j.jimonfin.2025.103296
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    Keywords

    Corporate climate concern; Corporate bond maturity; Financial distress; R&D investments;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access

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