The pricing of green bonds: external reviews and shades of green
Journal
Review of Managerial Science
ISSN
1863-6683
ISSN-Digital
1863-6691
Type
forthcoming
Date Issued
2021
Author(s)
Abstract
We investigate the asset pricing implications of the greenness of bonds. To estimate a green-pricing effect, we determine the `green bond premium' as the difference between the yields of matched conventional and green-labeled bonds. On a cross-sectional average, green bonds experience a statistically significant positive premium. This premium increases with external greenness evaluations, i.e., investors accept premiums of up to 5 basis points for bonds with a substantial environmental agenda. This external validation effect, which is strongest for bonds that are rated dark-green, may offset not incurring information costs, as this effect decreases with increasing age of bonds.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
SOF - System-wide Risk in the Financial System
Refereed
Yes
Publisher
Springer
Subject(s)
Division(s)
Eprints ID
260774