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Do Green Bonds Improve the Stock and Environmental Performance of Energy Firms? International Evidence

In: The ESG Framework and the Energy Industry

Author

Listed:
  • Burak Pirgaip

    (Hacettepe University)

  • Mehmet Baha Karan

    (Hacettepe University)

  • Seçil Sayın Kutluca

    (Capital Markets Board of Turkey)

Abstract

Given that the global decarbonization of the energy sector entails huge amount of investment, green bonds have become an important tool and source of long-term capital for energy firms. This chapter examines the impact of green bond issuance on their stock and environmental performance. We analyze a sample of 239 green bonds issued by 80 unique energy firms in the period 2013–2021. We first follow the event study methodology and find that market reaction to green bond issuance announcements is largely positive. Using the difference-in-differences approach, we then show that energy firms generally perform better in their environmental practices. However, our results also imply that green bond issuance has a lagged and temporary effect on stock prices and environmental achievements are not that obvious, particularly in the short term. We draw attention to partly inconclusive nature of these findings emerging from our analyses and offer relevant policy implications for green bond market development on the basis of tackling with greenwashing and scaling up the market share.

Suggested Citation

  • Burak Pirgaip & Mehmet Baha Karan & Seçil Sayın Kutluca, 2024. "Do Green Bonds Improve the Stock and Environmental Performance of Energy Firms? International Evidence," Springer Books, in: James Thewissen & Özgür Arslan-Ayaydin & Wim Westerman & André Dorsman (ed.), The ESG Framework and the Energy Industry, pages 159-183, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-48457-5_9
    DOI: 10.1007/978-3-031-48457-5_9
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    More about this item

    Keywords

    Green bonds; Energy firms; Environmental performance; Greenwashing; Sustainability;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • 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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