An Empirical Analysis of Corporate Sustainability Bonds
Sivaprasad, S. and Mathew, S. 2024. An Empirical Analysis of Corporate Sustainability Bonds. Business Strategy and The Environment. 33 (4), pp. 3299-3316. https://doi.org/10.1002/bse.3663
| Title | An Empirical Analysis of Corporate Sustainability Bonds |
|---|---|
| Type | Journal article |
| Authors | Sivaprasad, S. and Mathew, S. |
| Abstract | This study examines the performance of worldwide corporate sustainability bonds issued from 2014 to 2020. Unlike traditional bonds, the proceeds of sustainability bonds are utilised for financing projects to bring about environmental and socio-economic benefits. We analyse the short-term market reaction to announcements of sustainability and traditional bond issuance and document that the stock market reaction to an announcement of sustainability bonds is stronger than that for traditional bonds. We also find that multiple issuers of sustainability bonds get a more favourable market reaction than single issuers. Finally, we examine if ESG scores can positively and significantly impact the corporate performance of firms through the lens of sustainability bond issuances. We find that ESG scores are the primary performance drivers for firms, and the effect is more pronounced for firms that issue sustainability bonds. Overall, the results suggest that issuers of sustainability bonds show their commitment towards environmental and societal goals and thus benefit from favourable stock market reactions. |
| Keywords | Corporate sustainability bonds |
| traditional bonds | |
| ESG | |
| sustainable finance | |
| market performance | |
| Journal | Business Strategy and The Environment |
| Journal citation | 33 (4), pp. 3299-3316 |
| ISSN | 0964-4733 |
| 1099-0836 | |
| Year | 2024 |
| Publisher | Wiley |
| Publisher's version | License CC BY 4.0 File Access Level Open (open metadata and files) |
| Digital Object Identifier (DOI) | https://doi.org/10.1002/bse.3663 |
| Publication dates | |
| Published online | 20 Dec 2023 |
| Published in print | May 2024 |
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