Impact of green bond issues on Euronext firms’ stock abnormal returns

Marcos Pereira, Luís Gomes, Isabel Maldonado, Cláudia Pereira

Article ID: 8274
Vol 8, Issue 10, 2024

VIEWS - 169 (Abstract) 64 (PDF)

Abstract


Climate change is forcing countries to take strategic measures to reduce the negative impact on future generations. In this context, sustainable finance has played a key role in sustainable development since the establishment of environmental, social and governance principles. The underlying market has developed rapidly since its inception, with green bonds being the most prominent instrument. This article aims to study the impact of green bond issues on the abnormal stock returns of stocks listed on the main Euronext indices. The sample includes 58 issues carried out between 2014 and 2022 by 21 different firms listed on the AEX (Netherlands), BEL 20 (Belgium), CAC 40 (France), ISEQ 20 (Ireland), OBX (Norway) and PSI (Portugal) indices. The methodology follows the procedures of the event study using the market model. The results show significant positive stock price reaction on the issue date. After the abnormal losses just before the issues, suggesting the reserves of this consolidating market, abnormal gains persisted for over a week, providing evidence against the weak efficiency Euronext’s financial markets. The findings are useful for policy makers and entrepreneurs to promote innovative initiatives that encourage the financing and development of environmentally sustainable infrastructures.


Keywords


green bonds; sustainability; event study; abnormal returns; price reaction; Euronext

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DOI: https://doi.org/10.24294/jipd.v8i10.8274

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