Many Hands Make Light Work：Evidence from China&Apos;S Anti-Epidemic Bonds

Abstract

Based on China's anti-epidemic bond data, this paper investigates stock market reactions to the anti-epidemic bond issuance announcements during the COVID-19 pandemic. We find that anti-epidemic bond issuance significantly increases the cumulative abnormal return (CAR) compared with conventional bond issuance. Issuing anti-epidemic bonds can enhance firms' risk-resistance capacity and corporate social responsibility (CSR) performance during the pandemic period; thus, anti-epidemic bonds are favored by shareholders. Further analysis reveals that positive announcement stock returns for anti-epidemic bonds emerge only when the epidemic situation worsens, suggesting that market investors expect anti-epidemic bond issuers to perform better during the outbreak

Keywords: Anti-epidemic bonds, Stock market reaction, Covid-19, Cumulative abnormal return