Greenwashing and credit spread: Evidence from the Chinese green bond market

Guoquan Xu; Nuotian Lu; Yan Tong

doi:10.1016/j.frl.2022.102927

Greenwashing and credit spread: Evidence from the Chinese green bond market

Guoquan Xu
, Nuotian Lu
, Yan Tong^*

^*Corresponding author for this work

School of Management

Research output: Contribution to journal › Article › peer-review

84 Citations (Scopus)

Abstract

This study analyzes how greenwashing affects green bond (GB) pricing. With a unique dataset, we empirically find that greenwashing does exist in the Chinese GB market, leading to higher credit spread compared to that of traditional bonds. However, green bonds with third-party certification have lower credit spread. Furthermore, the heterogeneity of trading venues and issuer ESG performance results in differential effects of third-party certification on GB credit spread. These findings enrich the understanding of green bond pricing and shed light on the development of the GB market.

Original language	English
Article number	102927
Journal	Finance Research Letters
Volume	48
DOIs	https://doi.org/10.1016/j.frl.2022.102927
Publication status	Published - Aug 2022

Keywords

Credit spread
ESG
Fixed income securities
Green bond
Greenwashing

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10.1016/j.frl.2022.102927

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title = "Greenwashing and credit spread: Evidence from the Chinese green bond market",

abstract = "This study analyzes how greenwashing affects green bond (GB) pricing. With a unique dataset, we empirically find that greenwashing does exist in the Chinese GB market, leading to higher credit spread compared to that of traditional bonds. However, green bonds with third-party certification have lower credit spread. Furthermore, the heterogeneity of trading venues and issuer ESG performance results in differential effects of third-party certification on GB credit spread. These findings enrich the understanding of green bond pricing and shed light on the development of the GB market.",

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author = "Guoquan Xu and Nuotian Lu and Yan Tong",

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year = "2022",

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AB - This study analyzes how greenwashing affects green bond (GB) pricing. With a unique dataset, we empirically find that greenwashing does exist in the Chinese GB market, leading to higher credit spread compared to that of traditional bonds. However, green bonds with third-party certification have lower credit spread. Furthermore, the heterogeneity of trading venues and issuer ESG performance results in differential effects of third-party certification on GB credit spread. These findings enrich the understanding of green bond pricing and shed light on the development of the GB market.

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KW - Fixed income securities

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KW - Greenwashing

UR - https://www.scopus.com/pages/publications/85131036733

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Greenwashing and credit spread: Evidence from the Chinese green bond market

Abstract

Keywords

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