Green bonds and corporate performance : A potential way to achieve green recovery

In the post-COVID-19 era, the importance of green finance in green recovery is underlined. As a financial instrument serving green development, green bonds promise to raise funds to support climate- and environment-friendly projects. However, whether green bonds can improve corporate performance is of great concern to companies, affecting the long-term intrinsic driving force of green bond issuance. This study applies the dynamic difference-in-differences (DID) model to explore the impact of green bonds on corporate performance and its potential pathway by using the panel data of Chinese listed companies from 2010 to 2020. The main findings are as follows: (1) Green bonds can significantly increase corporate performance by an overall effect of 1.65%. (2) The positive effect of green bonds could be transferred and enhanced by possible mechanisms, including internal green patents and external social reputations. (3) The overall effect of green bonds varies among companies due to different ownership and eco-geographical locations. (4) Green bonds would motivate better corporate performance if the company is related to renewable energy or located in provinces with high renewable energy consumption. Therefore, it is necessary to promote green bonds, ultimately helping to achieve green recovery.