The announcement effect of green bond issuers on their listed share price

Abstract

In a low carbon economy transition, Green bond market represents one of the main tools to switch towards an ESG investment approach. This study focuses its attention on the Green Bond market in Europe, in particular it studies the effect of the announcement of a green bond issuance by a listed company on its share price. In order to investigate this relationship and test the market efficiency hypothesis, I used MacKinley event study methodology, computing cumulative abnormal returns on a final sample of green and conventional bonds going from January 2013 to December 2019. After having obtained evidence of non negative relationship between green bond issuance and the relative company share price, I conducted robustness checks controlling for some firm characteristics and some specific geographical regions. This study shows that firms can contribute to the environment protection without suffering reductions in their value.