Green bonds' reputation effect and its impact on the financing costs of the real estate sector

Arbeitspapier

This paper explores the effect of a firm's reputation of being a green bond issuer on its financing costs. Using a sample of 73 listed Swedish real estate companies issuing in total about 1500 bonds over the period from 2011 till 2021, differencein- difference analyses and instrumental variable estimations are applied to identify the causal impact of frequent green vis-à-vis frequent non-green bond issuing on a firm's cost of capital and credit rating. The paper argues that it is repetitive issuance which lowers a firm's cost of capital, while the effects from first or one-time green bond issuance is the opposite. In line with the reputation capital hypothesis, issuing green bonds even lowers the firm's cost of equity capital, while issuing non-green bonds has no effect on the cost of equity capital.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 2019

Classification and Topics

• Classification: Wirtschaft ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill ; Real Estate Markets, Spatial Production Analysis, and Firm Location: General ; Other Spatial Production and Pricing Analysis
• Subject: bond issuance ; green debt ; reputation capital ; sustainability ; ESG

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Petreski, Aleksandar ; Schäfer, Dorothea ; Stephan, Andreas
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/265521
• Last update: 10.03.2025, 11:42 AM CET