Can Green Bond Issuance Improve Stock Market Performance Of Companies

Under the background of the ―Carbon Peaking and Carbon Neutrality‖ goals,companies need to take full account of their own emission reduction responsibilities while creating economic value,and promote low-carbon transformation and green development of the industry and society.As one of the important green finance tools,green bonds can effectively support green industry investment projects and help sustainable development.Since the official launch of China’s green bond market in2016,China’s green bond market has developed vigorously.The number of enterprises issuing green bonds has increased year by year.The scale of green bonds has grown rapidly,from 200 billion yuan in 2016 to 428.3 billion yuan in 2021.Therefore,the issue effect of green bonds has become a new topic.What is the practical significance of green bond issuance? Can the issuance of green bonds improve a company’s stock market performance? How does it affect the stock market performance? Does the issuance of green bonds have different effect on companies with different ownership?In order to study the above issues,this thesis first briefly introduces the basic situation of China’s green bond market.Secondly,this thesis sorts out the relevant literature,Social Responsibility Investment theory,Corporate Reputation theory,and Signaling theory.Based on the above information,this thesis finds that as a positive externality measure of companies,the issuance of green bonds can transmit that the company is in good condition and holding green development concept,which can attract green investors with a strong sense of social responsibility.At the same time,good social responsibility performance can mitigate the impact of negative events of companies,bring insurance effects to companies,and therefore improve the stock market performance.This thesis selects A-share non-financial listed companies in 2012-2021,and uses the multi-period differences-in-differences(DID)method to measure the impact of green bond issuance on companies’ stock market performance,and discusses the heterogeneous results,further,this thesis analyzes the external signaling mechanism and internal governance mechanism.Through theoretical analysis and empirical research,the following conclusions are drawn.(1)The issuance of green bonds can significantly improve the companies’ stock market performance,both enhancing the return and reducing the stock price crash risk.(2)The positive effect of non-state-owned companies issuing green bonds on the stock market performance is more obvious than that of state-owned companies,which is related to the market’s view of ―obligation or responsibility‖.(3)The issuance of green bonds can improve the companies’ stock market performance through the ―external investor attention‖ mechanism,namely the signal effect.Specifically,the issuance of green bonds can enhance the excess return by attracting continuous attention from investors.(4)The issuance of green bonds can improve the companies’ stock market performance through the ―internal governance‖ mechanism,namely the governance effect.Specifically,the issuance of green bonds can reduce the stock price crash risk by improving the internal governance level.Based on the above research results,this thesis puts forward four corresponding policy recommendations: first,relevant regulatory authorities should actively guide companies to actively participate in the green bond market;Second,the relevant regulatory authorities should treat all market subjects equally and maintain a market environment of fair competition;Third,the relevant regulatory authorities should strengthen the cultivation of green investors and reasonably guide investors to invest in green products;Fourth,the relevant regulatory authorities should unify and strengthen the system of environmental information disclosure and improve the information circulation mechanism.The possible theoretical contributions of this paper are as follows: first,based on the internal and external perspectives,this paper supplements the theory of the impact of green bond issuance on the stock market performance of companies,and studies the possible impact mechanism.Secondly,this paper expands the research dimension.It not only measures the enhancement effect of stock prices from the perspective of market returns,but also considers the effect of stock price volatility.Third,it selects two dimensions of stock excess returns and stock price crash risk to conduct research.Finally,the research results of this paper are based on China’s institutional background and capital market,which contributes to the green financing planning of companies with different ownership properties in China.