Abstract
This study compares the yield to maturities on green versus brown corporate bonds on their issue dates. Comparisons are made by taking into account market, firm, bond, and currency characteristics in addition to the green status of the bonds. Analyses show that if these characteristics are not taken into consideration, it is possible to find support for the existence of a ‘greenium’ at a magnitude of about 25 basis points. However, when all yield factors are included in the models, results completely change and indicate that issuers do not necessarily enjoy any cost advantage when they issue green instead of brown bonds. Failure to consider the interactions among all control factors may lead to biased findings regarding the existence of a greenium.
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