Long-run performance following corporate green bond issuance

What is it about?

We examine the long-run financial and environmental performance of corporate green bond issuers, from 2013 to 2020. We adopt an event-time approach, and conduct robustness tests using the calendar-time method. In contrast with the earlier long-run event studies on conventional bonds and seasoned equity offerings, among others, our results reveal that green bond issuance is followed by the stock market performance of issuers, over 1-year and 3-year, post-issuance. We also find evidence that the long-run stock market performance is limited to multiple-time issuers and issuers operating in industries where the natural environment is financially material. However, this stock market performance is not due to the better operating performance of the issuers. Finally, we document that green bond issuers improve their environmental performance, including CO2 emission reduction and resource use efficiency, in the long-run. Green bond issuers are also more eco-innovative. Overall, our results invalidate the greenwashing hypothesis and support the signaling view that firms signal their commitment toward the environment by issuing green bonds.

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