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Financing the Response to Climate Change: The Pricing and Ownership of U.S. Green Bonds
Malcolm Baker,Malcolm Baker,Daniel Bergstresser,George Serafeim,Jeffrey Wurgler,Jeffrey Wurgler +5 more
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In this article, the authors study green bonds, which are bonds whose proceeds are used for environmentally sensitive purposes, and find that green municipal bonds are issued at a premium to otherwise similar ordinary bonds.Abstract:
We study green bonds, which are bonds whose proceeds are used for environmentally sensitive purposes. After an overview of the U.S. corporate and municipal green bonds markets, we study pricing and ownership patterns using a simple framework that incorporates assets with nonpecuniary utility. As predicted, we find that green municipal bonds are issued at a premium to otherwise similar ordinary bonds. We also confirm that green bonds, particularly small or essentially riskless ones, are more closely held than ordinary bonds. These pricing and ownership effects are strongest for bonds that are externally certified as green.read more
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Dissecting Green Returns
Lubos Pastor,Lubos Pastor,Lubos Pastor,Robert F. Stambaugh,Robert F. Stambaugh,Lucian A. Taylor +5 more
TL;DR: This article constructed a theoretically motivated green factor (a return spread between environmentally friendly and unfriendly stocks) and found that its positive performance disappears without climate-concern shocks, which explains much of the recent underperformance of value stocks.
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When ‘green’ challenges ‘prime’: empirical evidence from government bond markets
TL;DR: This paper examined co-movement between green bonds and triple-A government bonds during December 2008-November 2019 and found that two markets followed the heavy tail dependence using Student's t-cop...
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The pricing of green bonds: external reviews and the shades of green
TL;DR: In this paper, the authors investigate the asset pricing implications of the greenness of bonds and determine the green bond premium, as the difference between the yields of matched conventional and green-labeled bonds.
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Green bonds: a survey
TL;DR: A survey of recent academic developments in the literature on green bonds can be found in this article, where the authors provide a review of papers that study the market pricing of green bonds, the economic and environmental effects of green bond financing, as well as legal and institutional issues in the green bond market.
Journal ArticleDOI
The Allocation of Socially Responsible Capital
Daniel Green,Benjamin N. Roth +1 more
TL;DR: The authors developed a tractable framework in which commercial and social investors compete, and identified alternative strategies for social investors that result in higher social welfare and higher financial returns, and presented empirical evidence that socially-guided mutual funds allocate their capital inefficiently from the perspective of generating impact and financial returns.
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Socially responsible investments: Institutional aspects, performance, and investor behavior
TL;DR: In this paper, the authors provide a critical review of the literature on socially responsible investments (SRI) and conclude that existing studies hint but do not unequivocally demonstrate that SRI investors are willing to accept suboptimal financial performance to pursue social or ethical objectives.
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The Effect of Green Investment on Corporate Behavior
TL;DR: In this paper, the authors explore the effect of exclusionary ethical investing on corporate behavior in a risk-averse, equilibrium setting and show that it leads to polluting firms being held by fewer investors since green investors eschew polluting stocks.
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The effect of pro-environmental preferences on bond prices: Evidence from green bonds
TL;DR: In this paper, the authors used green bonds as an instrument to identify the effect of non-pecuniary motives, specifically pro-environmental preferences, on bond market prices.
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The Wages of Social Responsibility
Meir Statman,Denys Glushkov +1 more
TL;DR: This article analyzed returns during 1992-2007 of stocks rated on social responsibility by KLD and found that this tilt gave socially responsible investors a return advantage relative to conventional investors, but the return advantage of tilts toward stocks of companies with high social responsibility scores is largely offset by the return disadvantage that comes from the exclusion of stocks of'shunned' companies.
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Disagreement, Tastes, and Asset Prices
TL;DR: The authors provide a simple framework for studying how disagreement and tastes for assets as consumption goods can affect asset prices, and propose a model to estimate the probability distributions of future payoffs on assets.