Do Green Bonds Influence Stock Prices? An Emerging Market Perspective

Abstract

The aim of this dissertation is to provide crucial findings in regard to the influence of green bonds on the stock performance of corporations listed in the BRICS in order to close the gap between sustainable investing and long-term stock value which in return will assist investors in whether to invest in green bonds. Additionally, implementing a reference point for forthcoming studies intending to research complementary topics to mitigate the gap in academic literature is another purpose of this study. Therefore, this paper will try to answer the following research questions to discover the relationship between green bonds and stock price movement: Is there a correlation between green bonds and the stock price movement of corporations listed in the BRICS stock market? How significant is the correlation among them (if there is any)? What are the determinants that influence this relationship? Furthermore, the paper will discuss three theories related to the research area: overinvestment, signaling, and stakeholder theory, which are used to direct the research to explain the research questions as signaling and stakeholder theories suggest that actions of the company that have been taken for the greater good of the society and its stakeholders will be compensated by the market and overinvestment theory will discuss whether green bonds issuance may not affect stock price movements as a result of information asymmetry.