On the corporate performance of issuers of various green assets

This study examines the corporate performance of green and brown asset issuers in China and the driving forces for the asset premium of green bonds, asset-backed securities (ABSs) and real estate investment trusts (REITs). Using quarterly data from 2016 to 2023 under a two-layered model structure, a significant positive impact is found on the corporate profitability of companies issuing green bonds and ABSs compared to brown securities, but insignificant results for green REITs. While green bonds help improve corporate performance, having green bonds and ABSs simultaneously is more conducive. A higher environmental, social, and governance (ESG) rating, an environmentally friendly issuer and an involvement in renewable energy or new energy vehicle businesses all have beneficial effects on the issuer's profitability regardless of the type of assets launched. Moreover, credit enhancement leads to a higher premium especially for corporate assets without a guarantee clause or frequent transactions. In summary, to boost the influence of green assets, companies should improve their ESG rating and green reputation, and the government should advance research and promotion of green financial instruments, improve information disclosure and risk evaluation, and advocate the renewable energy and new energy vehicle sectors.

Duke Scholars

Author Bin Mei Environmental Sciences and Policy