Corporate Green Bonds: The Role of External Reviews for Investment Greenness and Disclosure Quality

Tami Dinh, Florian Eugster and Anna Husmann
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Tami Dinh: University of St. Gallen
Florian Eugster: University of St. Gallen and Swiss Finance Institute
Anna Husmann: University of St. Gallen

No 23-33, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: Based on signaling theory, we examine the role of external reviews during the life-cycle of corporate green bonds. We focus on (1) whether investment greenness is related to external review upon issuing a green bond and (2) whether disclosure quality is positively associated with the assurance of green bond reports. Our results indicate that although companies with worse environmental performance are more likely to obtain at-issuance external reviews for their green bonds, their certified investments are more likely to be greener than those companies that did not obtain a review at issuance. This suggests that a more regulated form of external review may serve as a credible signal for green proceeds invested. In addition, we develop a disclosure index for green bond reports and show that post-issuance report assurance is associated with increased transparency. Our findings provide evidence that external reviews in the green bond issuance process are important governance factors to rule out potential greenwashing through the use of corporate green bonds.

Keywords: Green Bonds; External Review; Assurance; Sustainable Investments; Disclosure Quality (search for similar items in EconPapers)
JEL-codes: G23 M14 M41 M42 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2023-05
New Economics Papers: this item is included in nep-cfn, nep-ene and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2333

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