The Benefits of Issuing Green Bonds: Evidence From China Green Bonds Market

17 Pages Posted: 28 Nov 2020

See all articles by Dong Wang

Dong Wang

School of Economics and Management, Beihang University

Ping Li

Beihang University (BUAA) - School of Economic and Management Science

Date Written: September 30, 2020

Abstract

In 2019, China has become the largest issuance source in the global green bonds market. This paper studies the benefits of green bonds issuance to issuers and investors in China green bond market, including announcement effect, green premium, and the changes of firm financial performance and institutional ownership. First, green bonds issuance has a negative but insignificant announcement effect on the company’s stock return. Then we find that green premium is nearly zero demonstrating that investors are not willing to sacrifice profits for environmentally friendly projects. Thirdly, after green bonds issuance, financial performance of issuers does not have a significant improvement, but institutional ownership ratio has increased notably. In short, there is no significant difference between green bonds and conventional bonds in terms of issuance. Green bonds issuance may not have a direct pecuniary benefit to firms and investors but can be added into portfolios of institutional investors and improve their ESG score.

Keywords: Green bonds, Green premium, Announcement effect, Financial performance, Ownership structure

JEL Classification: G12, G14, G30

Suggested Citation

Wang, Dong and Li, Ping, The Benefits of Issuing Green Bonds: Evidence From China Green Bonds Market (September 30, 2020). Available at SSRN: https://ssrn.com/abstract=3710646 or http://dx.doi.org/10.2139/ssrn.3710646

Dong Wang (Contact Author)

School of Economics and Management, Beihang University ( email )

Xueyuan Road, Haidian District
Beijing, 100191
China

Ping Li

Beihang University (BUAA) - School of Economic and Management Science ( email )

37 Xue Yuan Road
Beijing 100083
China

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