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Stock market reaction to green bond announcements: The role of firm sustainability

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  • Berdiev, Urol

Abstract

This study examines how a firm’s sustainability impacts investor reactions to initial green bond announcements in Japan. We find that investors respond positively to issuances by firms with strong sustainability practices, while announcements from less sustainable firms show no significant market reaction. These results suggest that investors value credible green financing and are cautious about potential greenwashing or unclear disclosures. Our findings highlight the importance of standardized sustainability reporting and stronger regulatory frameworks to promote transparency and genuine corporate sustainability.

Suggested Citation

  • Berdiev, Urol, 2025. "Stock market reaction to green bond announcements: The role of firm sustainability," Finance Research Letters, Elsevier, vol. 86(PA).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pa:s1544612325015491
    DOI: 10.1016/j.frl.2025.108295
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    Keywords

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    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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