Green Bonds Impact on Firm Performance
The Mediating Role of Financial Risk and Financial Quality
Bibliographic Data
| ID | 12306172 |
|---|---|
| Authors | Muhammad Alamgir (0000-0003-3249-5514, Nicolaus Copernicus University in Torun Torun Poland, corresponding author), Magdalena Osińska (0000-0002-9796-2892, Nicolaus Copernicus University in Torun Torun Poland), Ming‐Chang Cheng (0000-0002-1184-4343, National Chung Cheng University Chiayi Taiwan, corresponding author) |
| Year | 2025 |
| Volume | 34 |
| Issue | S2 |
| Pages | 1135-1154 |
| Publication date | 2025-11-03 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Sustainable Development (JOURNAL) |
| Journal identifiers | ISSN: 0968-0802 • E-ISSN: 1099-1719 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1002/sd.70387 |
| OpenAlex | W4415830820 |
| Language | EN |
| References cited | 51 |
Green bonds have emerged as a significant financial instrument with dual benefits, positively impacting corporate performance and environmental sustainability. They focus on stakeholder theory instead of shareholder interest. This study examines the effect of green bond issuance on firm performance, focusing on the mediating roles of firm financial risk and financial quality. Using panel data from 2012 to 2022, the study employs the Propensity Score Matching‐Difference in Differences (PSM‐DID) method to analyze the relationship between green bonds and firm performance. The findings indicate that green bonds enhance both financial and environmental performance. Firms issuing green bonds experience improved firm value (Tobin's Q ) and profitability (ROA), with the effects becoming more pronounced in the second year post‐issuance. Additionally, green bond issuance lowers financial risk, as reflected in reduced debt‐to‐equity ratios, and enhances financial quality, indicated by higher Altman Z ‐scores. Green bonds also reduce the cost of capital (WACC), attracting investors seeking sustainable investments, which typically have lower yields than conventional bonds. On the environmental front, firms that issue green bonds show significant improvements in ESG scores and achieve lower carbon emissions than those that do not issue such bonds. However, while green bond issuance initially leads to a notable reduction in carbon emissions, this effect slightly diminishes in the second year, highlighting the need for sustained sustainability initiatives
Bond · Bond market · Capital market · Financial market · Panel data · Profitability index · Shareholder · Sustainability · Business and Economic Development · Corporate Social Responsibility Reporting · Sustainable Finance and Green Bonds
Strategic Management
Business Ethics
Endogeneity in Empirical Corporate Finance1
Do shareholders benefit from green bonds?
The effect of pro-environmental preferences on bond prices
Outsourcing at Will
Environmental risk management and the cost of capital
The Impact of Corporate Sustainability on Organizational Processes and Performance
The central role of the propensity score in observational studies for causal effects
Some Tests of Specification for Panel Data
Firm Resources and Sustained Competitive Advantage
Mostly Harmless Econometrics
An Introduction to Propensity Score Methods for Reducing the Effects of Confounding in Observational Studies
Does environmental regulation drive away inbound foreign direct investment? Evidence from a quasi-natural experiment in China
Job Market Signaling
Recent Developments in the Econometrics of Program Evaluation
| Citation velocity | historical |
|---|---|
| Highly cited | No |