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The impact of environmental information disclosure on the cost of green bond: Evidence from China

Author

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  • Tang, Ying
  • Wang, Biliang
  • Pan, Ningning
  • Li, Zhiyong

Abstract

In light of the rapid development of the green bond market and the importance of environmental information disclosure (EID) for green bond issuance, this study investigates the association between EID and the financing cost of green bonds. Using a sample of 561 green bonds issued between 2016 and 2020 in China, we use the entropy method to calculate the EID quality index based on a comprehensive evaluating system for green bonds, and then examine the impact of EID quality on the cost of green bonds. The results show that higher EID quality helps to reduce the yield spread of green bonds. These findings hold after addressing potential concerns for endogeneity. Channel tests indicate that information transparency and investors' expected risk play a mediating role in the relationship between EID quality and green bond yield spread. Cross-sectional analysis shows that EID has a greater negative impact on the yield spread of green bonds among those issued by non-financial firms and by issuers with better historical reputation. Overall, our findings highlight the importance of EID in the green bond market and provide insightful implications for market participants and policymakers.

Suggested Citation

  • Tang, Ying & Wang, Biliang & Pan, Ningning & Li, Zhiyong, 2023. "The impact of environmental information disclosure on the cost of green bond: Evidence from China," Energy Economics, Elsevier, vol. 126(C).
    • Handle: RePEc:eee:eneeco:v:126:y:2023:i:c:s0140988323005066
    DOI: 10.1016/j.eneco.2023.107008
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    More about this item

    Keywords

    Green bond; Environmental information disclosure; Yield spread;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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