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Greenwashing and credit spread: Evidence from the Chinese green bond market

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  • Xu, Guoquan
  • Lu, Nuotian
  • Tong, Yan

Abstract

This study analyzes how greenwashing affects green bond (GB) pricing. With a unique dataset, we empirically find that greenwashing does exist in the Chinese GB market, leading to higher credit spread compared to that of traditional bonds. However, green bonds with third-party certification have lower credit spread. Furthermore, the heterogeneity of trading venues and issuer ESG performance results in differential effects of third-party certification on GB credit spread. These findings enrich the understanding of green bond pricing and shed light on the development of the GB market.

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  • Xu, Guoquan & Lu, Nuotian & Tong, Yan, 2022. "Greenwashing and credit spread: Evidence from the Chinese green bond market," Finance Research Letters, Elsevier, vol. 48(C).
    • Handle: RePEc:eee:finlet:v:48:y:2022:i:c:s1544612322001830
    DOI: 10.1016/j.frl.2022.102927
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    2. Chen, Xia & Wang, Lili & Zhu, Yinghuan & Shang, Yue, 2023. "Has shareholder background been priced?–Evidence from the issuance of financial bonds by financial leasing companies," Finance Research Letters, Elsevier, vol. 56(C).
    3. Qi, Xiaohong & Zhang, Guofu, 2022. "Dynamic connectedness of China’s green bonds and asset classes," The North American Journal of Economics and Finance, Elsevier, vol. 63(C).
    4. Liu, Changyu & Song, Yadong & Wang, Wei & Shi, Xunpeng, 2023. "The governance of manufacturers’ greenwashing behaviors: A tripartite evolutionary game analysis of electric vehicles," Applied Energy, Elsevier, vol. 333(C).
    5. Jinyu Chen & Yan Yang & Ran Liu & Yuan Geng & Xiaohang Ren, 2023. "Green bond issuance and corporate ESG performance: the perspective of internal attention and external supervision," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-12, December.
    6. Xu, Xinkuo & Li, Jingsi, 2023. "Can green bonds reduce the carbon emissions of cities in China?," Economics Letters, Elsevier, vol. 226(C).
    7. Huacheng Rao & Dongxu Chen & Feichao Shen & Yangyang Shen, 2022. "Can Green Bonds Stimulate Green Innovation in Enterprises? Evidence from China," Sustainability, MDPI, vol. 14(23), pages 1-19, November.
    8. Su, Tong & Shi, Yuning & Lin, Boqiang, 2023. "Label or lever? The role of reputable underwriters in Chinese green bond financing," Finance Research Letters, Elsevier, vol. 53(C).

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