Impact of green bonds issuance on stock prices - Evidence from India.

Today, with the increasing global warming, many companies are trying to adopt sustainable ways of producing the product and preserve the atmosphere. A green bond is one such financial tool that helps companies to raise the funds for social and eco-friendly projects. Keeping this in view and the Indian market emerging as the second-largest bond market in terms of green bond issuance; this paper aims to identify the impact on stock prices due to the issuance of green bonds by the companies. We conduct an event study to understand how the stock prices are subject to volatility due to green bond issuance during the period 2018-2021. The data is collected from secondary sources like Economic Times, Business Standard, Climate Bond Initiative, and the BSE website. The event window is assumed to be [-30,30], [-15, 15] and [-7, 7] days. Using Cumulative Average Abnormal returns and t-tests we understand the volatility of stock prices due to green bond issuance. The empirical results show that green bonds have a short-term impact on stock prices. Overall, the study can be a great input for the investors to understand the behavior of stocks due to the issuance of green bonds. [ABSTRACT FROM AUTHOR]