An empirical investigation of the relationship between green bonds issuance and firm value and financial performance

Abstract: This thesis examines how the stock market responses to the announcement of green bond issuance and compares the different stock market reactions to the announcement of green bond issuance and the announcement of regular bond issuance through event study using stock return data. In addition, this thesis investigates the relation between the issuance of green bond and firm value as well as the association between the issuance of green bond and profitability using firm-level data from 2013 to 2018. We find that the stock market does not have a significant and positive reaction to the announcement of green bond issuance, and the difference of market response to the announcement of green bond issuance and regular bond issuance is insignificant, implying that the stock market does not seem to value green bond more than regular bond around the announcement. Using multivariate regressions, we further find that there is a positive and significant relation between the first issuance of green bond and firm value in the long run, indicating that firms' conversion from a regular firm to a green one is valued. However, results do not indicate any significant association between first issuance of green bond and profitability.