Carbon efficiency and green bonds: The institutional investors’ green touch

Imen Khanchel, Naima Lassoued, Cyrine Khiari and Sana-Akbar Khan

Research in International Business and Finance, 2025, vol. 77, issue PB

Abstract: This study investigates the relationship between green bonds and carbon efficiency and examines whether institutional ownership moderates this relationship. Using a sample of U.S. firms that issued green bonds alongside an equal number of matched companies without green bonds from 2014 to 2022, we estimate carbon efficiency through the robust and widely accepted Data Envelopment Analysis (DEA) method. Our results reveal a positive link between green bonds and carbon efficiency, suggesting that firms engaged in green financing have the potential to achieve significantly higher carbon efficiency levels than their counterparts. Furthermore, we confirm that institutional ownership significantly moderates the relationship; that is, firms with higher levels of institutional ownership exhibit an even stronger positive relationship between green bonds and carbon efficiency. This underscores the crucial role of institutional investors in enhancing firms' sustainability efforts by supporting and overseeing green financing.

Keywords: Green bonds; Carbon efficiency; Institutional investors; Data envelopment analysis (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:77:y:2025:i:pb:s0275531925001990

DOI: 10.1016/j.ribaf.2025.102943

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