The Impact of Green Bond Issuance on Firms’ Financial and ESG Performance: Does the Proportion of Green Bonds Matter?

31 Pages Posted: 23 Sep 2022

See all articles by Thi-Hong-Van Hoang

Thi-Hong-Van Hoang

GSCM-Montpellier Business School; Montpellier Business School

Romain BERROU

Montpellier Business School

Linh Pham

University of Central Oklahoma - Department of Economics

Abstract

Green bonds have become an important tool in sustainable finance to support climate-friendly investment projects. In this context, the objective of this study is to understand the effect of a company’s green bond issuance on its subsequent environmental performance. To this end, we collect data on the number and amount of green bonds issued by 75 issuer companies worldwide from 2016 to 2020. Our empirical results show that green bond issuance is positively related to ESG disclosure scores and its three dimensions. However, it exhibits an insignificant relationship with ESG performance, measured by GHG emissions, energy consumption, the proportion of women on board, and board size. Regarding financial performance, the amount of green bonds issued negatively correlates with ROA and ROE for European firms and firms in light industries, respectively. In addition, the effect of green bond issuance on a company’s ESG disclosure score is temporary as the impact of green bond issuance is smaller and less statistically significant at longer lags. Finally, country-level sustainable development scores have a negative relationship with firms’ GHG emissions, with an effect which is significant only after 1 or 2 years.

Keywords: Green Bonds, ESG performance, Financial performance, Panel data.

Suggested Citation

Hoang, Thi-Hong-Van and BERROU, Romain and Pham, Linh, The Impact of Green Bond Issuance on Firms’ Financial and ESG Performance: Does the Proportion of Green Bonds Matter?. Available at SSRN: https://ssrn.com/abstract=4227810 or http://dx.doi.org/10.2139/ssrn.4227810

Thi-Hong-Van Hoang (Contact Author)

GSCM-Montpellier Business School ( email )

2300, Avenue des Moulins
Montpellier, 34185
France

Montpellier Business School ( email )

2300 avenue des Moulins
Montpellier, 34185
France

HOME PAGE: http://https://www.montpellier-bs.com/international/microfinance-chair-home/

Romain BERROU

Montpellier Business School ( email )

Linh Pham

University of Central Oklahoma - Department of Economics ( email )

Edmond, OK 73034
United States

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