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Stock market reaction to green bond issuance

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  • Vishaal Baulkaran

    (University of Lethbridge)

Abstract

This study examines the stock market reaction to the announcement of green bond issuance. The cumulative abnormal returns are positive and significant. This implies that shareholders view this form of financing as value-enhancing and funds from green bonds issuance are used to undertake profitable green projects or as a means of risk mitigation. Regression analysis shows that green bonds with higher coupon rates elicit a negative investor reaction. Also, firm size, Tobin’s Q, and growth are positively related to the CAR, while operating cash flow is negatively related to the CAR. The positive coefficient for firm growth is consistent with the value-enhancing function of funds from green bonds.

Suggested Citation

  • Vishaal Baulkaran, 2019. "Stock market reaction to green bond issuance," Journal of Asset Management, Palgrave Macmillan, vol. 20(5), pages 331-340, September.
    • Handle: RePEc:pal:assmgt:v:20:y:2019:i:5:d:10.1057_s41260-018-00105-1
    DOI: 10.1057/s41260-018-00105-1
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    References listed on IDEAS

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    More about this item

    Keywords

    Green bonds; Event study; Environmental sustainability;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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