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Can Green Investment Win the Favor of Investors in China? Evidence from the Return Performance of Green Investment Stocks

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  • Xianfang Su

Abstract

Green investment is a highly praised form of investment behavior in today’s China. The ecological value of green investment has reached a consensus, but its financial performance remains an open question. Based on a unique dataset of 77 green investment stocks covering the period from July 2012 to December 2017, this paper investigates the returns performance of green investments employing multifactor models and propensity score matching techniques. We find that green investment stocks underperform conventional stocks and offer less protection against extreme downside risk, which indicates that investors need to pay what amounts to a premium or supplemental cost for going green. Our empirical results point to some important implications for policymakers and investors.

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  • Xianfang Su, 2021. "Can Green Investment Win the Favor of Investors in China? Evidence from the Return Performance of Green Investment Stocks," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(11), pages 3120-3138, September.
    • Handle: RePEc:mes:emfitr:v:57:y:2021:i:11:p:3120-3138
    DOI: 10.1080/1540496X.2019.1710129
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    Cited by:

    1. Bouteska, Ahmed & Ha, Le Thanh & Bhuiyan, Faruk & Sharif, Taimur & Abedin, Mohammad Zoynul, 2024. "Contagion between investor sentiment and green bonds in China during the global uncertainties," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 469-484.
    2. Youtang Zhang & Hagos Mesfin Berhe, 2022. "The Impact of Green Investment and Green Marketing on Business Performance: The Mediation Role of Corporate Social Responsibility in Ethiopia’s Chinese Textile Companies," Sustainability, MDPI, vol. 14(7), pages 1-24, March.
    3. Narayan, Paresh Kumar, 2024. "Pricing behavior of clean energy stocks? Some trading implications," Energy Economics, Elsevier, vol. 134(C).
    4. Xiaohui Wu & Yumin Li & Chong Feng, 2023. "Green innovation peer effects in common institutional ownership networks," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(2), pages 641-660, March.
    5. Hooi Hooi Lean & Fabio Pizzutilo & Kimberly Gleason, 2023. "Portfolio performance implications of investment in renewable energy equities: Green versus gray," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(6), pages 2990-3005, November.
    6. Ved Dilip Beloskar & S. V. D. Nageswara Rao, 2024. "Screening activity matters: Evidence from ESG portfolio performance from an emerging market," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(3), pages 2593-2619, July.
    7. Yao Xiao & Weimin Yan & Benhong Peng, 2023. "Explore the Complex Interaction between Green Investment and Green Ecology: Evaluation from Spatial Econometric Models and China’s Provincial Panel Data," Sustainability, MDPI, vol. 15(12), pages 1-18, June.

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