Why do firms issue green bonds?

Jean-Charles Rochet, Shema Mitali and Julien Daubanes ()
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Jean-Charles Rochet: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Shema Mitali: SKEMA Business School - SKEMA Business School, UniCA - Université Côte d'Azur

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Abstract: Corporate green bond announcements generate positive abnormal stock returns. We suggest this might be because managers use green bonds to signal the profitability of the climate-friendly projects they finance. First, we build a signaling model of green bond issuance. It predicts that firms' incentives to decarbonize are amplified by the interest of their managers in their stock price. Second, we provide supporting empirical evidence, using cross-country variations in effective carbon prices, and cross-industry differences in the stock-price sensitivity of managers' compensation. Our results suggest that green bonds are not substitutes for but rather complements to carbon pricing.

Keywords: Managerial incentives; Carbon pricing; Climate policy; Green finance; Green bonds (search for similar items in EconPapers)
Date: 2026
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Published in Energy Journal, 2026, 47 (2), pp.81-102. ⟨10.1177/01956574251366200⟩

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Related works:
Journal Article: Why Do Firms Issue Green Bonds? (2026)
Working Paper: Why Do Firms Issue Green Bonds? (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05476791

DOI: 10.1177/01956574251366200

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