Direkt zum Inhalt

Green Bonds’ Reputation Effect and Its Impact on the Financing Costs of the Real Estate Sector

Discussion Papers 2019, 25 S.

Aleksandar Petreski, Dorothea Schäfer, Andreas Stephan

2022

get_appDownload (PDF  0.55 MB)

Abstract

This paper explores the effect of a firm’s reputation of being a green bond issuer on its financing costs. Using a sample of 73 listed Swedish real estate companies issuing in total about 1500 bonds over the period from 2011 till 2021, difference-in-difference analyses and instrumental variable estimations are applied to identify the causal impact of frequent green vis-à-vis frequent non-green bond issuing on a firm’s cost of capital and credit rating. The paper argues that it is repetitive issuance which lowers a firm’s cost of capital, while the effects from first or one-time green bond issuance is the opposite. In line with the reputation capital hypothesis, issuing green bonds even lowers the firm’s cost of equity capital, while issuing non-green bonds has no effect on the cost of equity capital.

Dorothea Schäfer

Research Director Financial Markets



JEL-Classification: G32;R30;R32
Keywords: Bond issuance, green debt, reputation capital, sustainability, ESG

keyboard_arrow_up