Shareiholder Wealth: An Event Study of Green and Non-Green Bond Issuance in Scandinavia

Sammanfattning: The green bond market has grown immensely since 2013 and is projected to continue on this growth path in the future. There is no consensus surrounding the effect of green bonds on the issuing firms share price. The purpose of this study is to analyze and compare the effect the announcement of the issuement of green bonds and conventional bonds have on the issuing firm’s share price in Scandinavia. An event study was conducted and we analyzed the cumulative abnormal returns (CARs) of both green and non-green bond issues using the capital asset pricing model (CAPM) in three different event windows. We found positive CARs for both first-time and subsequent issuers of green bonds, with statistical significant positive CARs for subsequent issuers in one of the analyzed event windows. The results also indicate that negative CARs are associated with the issuement of conventional bonds, albeit not statistically significant. This points to the conclusion that the Scandinavian equity market reacts positively to the issuement of green bonds compared to the established negative view of conventional debt.