Do stock prices react to green bond issuance announcements? An event study and cross-sectional investigation of green bonds on the US market

Sammanfattning: The green bond market has grown rapidly in recent years; however, it has still received little academic exploration. To further understand green bond issuances, this study examines how stock prices react to the announcement of corporate green bond issuances and compares it to the stock market reactions of traditional corporate bond issuance announcements. Moreover, the paper investigates any possible differences in stock market reactions of green bond announcements between different business sectors as issuances in some industries are more common than others. Hence, it is of interest to look at how stock price reactions from green bond announcements differ per sector. The study contributes to previous research by focusing on one country, the US market, using a sample from exchange-listed companies between 2014 and 2020. We find that the stock market reacts more positively to green bond announcements than traditional bond announcements but no significant results proving that green bond announcements positively impact stock prices on a standalone basis. Furthermore, no statistically significant results are found on sector differences when announcing a green bond issuance.