TY - JOUR
T1 - Green bonds
T2 - Do investors benefit from third-party certification?
AU - Zirek, Duygu
AU - Unsal, Omer
N1 - Funding Information:
☆ We thank the Climate Bond Initiative for making their database available. We also thank the participants of the 2018 Southern Finance Association, 2019 Southwestern Finance Association, and 2019 Eastern Finance Association annual meetings, the 2019 Paris Financial Management Conference, and the 2020 Financial Management Association annual meeting for their comments.
Publisher Copyright:
© 2023 Elsevier Inc.
PY - 2023/11
Y1 - 2023/11
N2 - This study investigates whether green-bond certification benefits climate-risk-concerned investors. We compare the performance of green bonds and their degree of compliance with the Green Bond Principles and find that certification appears to play no role in bond performance—bonds with different certification tiers are indistinguishable from others. However, bond characteristics, such as issuer type and bond domicile, are significant factors in the review. We argue that, while review and certification might not have a visible impact on performance, firms may resort to the certification scheme to increase their attractiveness. Our paper highlights the need for a more robust classification system that allows investors to better differentiate green and conventional bonds.
AB - This study investigates whether green-bond certification benefits climate-risk-concerned investors. We compare the performance of green bonds and their degree of compliance with the Green Bond Principles and find that certification appears to play no role in bond performance—bonds with different certification tiers are indistinguishable from others. However, bond characteristics, such as issuer type and bond domicile, are significant factors in the review. We argue that, while review and certification might not have a visible impact on performance, firms may resort to the certification scheme to increase their attractiveness. Our paper highlights the need for a more robust classification system that allows investors to better differentiate green and conventional bonds.
KW - Certification
KW - Fixed-income securities
KW - Green bonds
KW - Sustainable development
UR - http://www.scopus.com/inward/record.url?scp=85166539314&partnerID=8YFLogxK
U2 - 10.1016/j.gfj.2023.100872
DO - 10.1016/j.gfj.2023.100872
M3 - Article
AN - SCOPUS:85166539314
SN - 1044-0283
VL - 58
JO - Global Finance Journal
JF - Global Finance Journal
M1 - 100872
ER -
