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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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The role of ESG scoring and greenwashing risk in explaining the yields of green bonds: A conceptual framework and an econometric analysis
TL;DR: In this paper , the authors investigated the factors that most influence the yields of public sector and corporate green bonds besides those conveyed by the conventional finance theory (e.g., rating, volatility, maturity) and found that investors are willing to accept lower returns in exchange for contributing to the funding of infrastructure projects with greater impact on the sustainability of target communities or territories and require higher premia as a form of compensation when being exposed to higher risk of greenwashing by issuers.
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Green bond issuance and corporate cost of capital
Ran Zhang,Yanru Li,Yingzhu Liu +2 more
TL;DR: In this paper, the authors investigated the impact of green bonds for environmental protection initiatives on the corporate cost of capital and found that green projects help reduce information asymmetry, improving security liquidity, and lowering bond issuers' perceived risk.
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The Role of a Green Factor in Stock Prices. When Fama & French Go Green
Ricardo Gimeno,Clara I. González +1 more
TL;DR: In this article , the authors extend the framework of the factor models that explain the expected return of stock models to include a climate change exposure factor, which is relevant in the market and allows for an approximation of the climate change risk of firms with poor disclosure of their green performance.
Journal ArticleDOI
ES Risks and Shareholder Voice
TL;DR: In this article, the authors show that investor support for ES proposals contains information regarding future risks that firms face, and that support levels are informative regarding the probability of negative tail returns that stem from future ES incidents.
References
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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.