Signaling sustainability: Differential reaction of the stock market following the announcement of sustainability-linked bonds

Beat Affolter, Elisa Ciarla, Julia Meyer and Sugandhita Sugandhita

Finance Research Letters, 2024, vol. 63, issue C

Abstract: This paper explores the suitability of sustainability-linked bonds (SLBs) for signaling sustainability intentions by analyzing the market reaction following their announcement and issuance. We find no significant share price reaction for SLBs targeting greenhouse gas emission reduction objectives. The lack of significant market reaction also applies to SLB-independent emission-reduction announcements. In contrast, for other types of SLB goals, such as those linked to sustainability ratings, renewable energy, or energy efficiency, we observe a significant positive market reaction. We argue that climate transition activities of companies are already priced by the market, while other sustainability goals are positively received.

Keywords: Sustainable finance; Sustainability-linked bonds; Climate targets; Event study (search for similar items in EconPapers)
JEL-codes: G20 G32 Q51 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612324002915
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:63:y:2024:i:c:s1544612324002915

DOI: 10.1016/j.frl.2024.105261

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().