This study aims to examine the impact of green bond issuances on stock returns in an emerging market context, focusing on how sustainability-linked financing decisions are interpreted by capital markets and their implications for firm performance management.
Event study methodology is employed to analyze stock price movements over a 21-day event window, spanning 10 days before and after the announcement of green bond issuances. The analysis focuses on firms in the banking, financial, infrastructure and energy sectors. Cumulative abnormal returns (CARs) are estimated using mean-, market- and risk-adjusted models to ensure robustness.
The results indicate a positive but statistically insignificant association between green bond issuances and cumulative abnormal returns around the announcement period. This suggests that such issuances do not adversely affect shareholder value and are perceived by investors as value-neutral to mildly value-enhancing signals, reflecting a degree of market confidence in sustainability-oriented financing.
This study contributes to the sustainable finance and performance management literature by examining how capital markets interpret sustainability-oriented financing decisions. Using evidence from an emerging economy, it conducts event-study analyses to jointly examine public and private sector green bond issuers while employing multiple return-estimation models to enhance robustness. Beyond assessing stock market reactions, the study positions green bond issuance within a performance management framework, showing that such instruments support the alignment of environmental objectives, strategic capital allocation and long-term value creation. The findings advance understanding of how sustainability-linked financing can contribute to organizational performance without generating adverse market consequences, thereby extending the role of green bonds beyond environmental financing to a broader mechanism of sustainable performance management.
