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Carbon efficiency and green bonds: The institutional investors’ green touch

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  • Khanchel, Imen
  • Lassoued, Naima
  • Khiari, Cyrine
  • Khan, Sana-Akbar

Abstract

This study investigates the relationship between green bonds and carbon efficiency and examines whether institutional ownership moderates this relationship. Using a sample of U.S. firms that issued green bonds alongside an equal number of matched companies without green bonds from 2014 to 2022, we estimate carbon efficiency through the robust and widely accepted Data Envelopment Analysis (DEA) method. Our results reveal a positive link between green bonds and carbon efficiency, suggesting that firms engaged in green financing have the potential to achieve significantly higher carbon efficiency levels than their counterparts. Furthermore, we confirm that institutional ownership significantly moderates the relationship; that is, firms with higher levels of institutional ownership exhibit an even stronger positive relationship between green bonds and carbon efficiency. This underscores the crucial role of institutional investors in enhancing firms' sustainability efforts by supporting and overseeing green financing.

Suggested Citation

  • Khanchel, Imen & Lassoued, Naima & Khiari, Cyrine & Khan, Sana-Akbar, 2025. "Carbon efficiency and green bonds: The institutional investors’ green touch," Research in International Business and Finance, Elsevier, vol. 77(PB).
    • Handle: RePEc:eee:riibaf:v:77:y:2025:i:pb:s0275531925001990
    DOI: 10.1016/j.ribaf.2025.102943
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