Comparative analysis of green bond issuance impact on stock prices

: European utility sector vs. overall market

Abstract

This study investigates the impact of green bond issuance on stock prices within the European utility sector, compared to the broader market. Utilizing an event study methodology, the research analyzes data from 2008 to 2024, employing the Fama-French Three-Factor and Five-Factor models to examine performance dynamics. The analysis includes both short [-5,5] and long [-10,10] event windows to capture immediate and extended market reactions. Results indicate a generally positive market reaction to green bond announcements, particularly in the broader market. However, the utility sector shows a more complex response, highlighting the importance of sector-specific factors. Regression analyses reveal that green bond issuance significantly influences Cumulative Abnormal Returns (CARs), with firm size being a notable positive driver. The study underscores the necessity for tailored strategies in different sectors when issuing green bonds and suggests that future research should explore additional factors and regional variations to enhance the understanding of green bond impacts on financial performance and sustainability efforts.

Date of Award	22 Oct 2024
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Zoe Venter (Supervisor)