We investigate whether a firm’s decision on green bond issuances is influenced by the green bond issuances by other firms in the same industry. We find that a firm is significantly more likely to issue green bonds after observing that other firms in the same industry have previously issued green bonds. This effect cannot be explained by the issuer’s supplement to their previous issuances, incentive policies, and industry competition. Furthermore, we show that issuing green bonds can bring significant positive stock excess returns, which increases the motivation for institutional investors to learn and drive other firms in the same industry they hold to issue green bonds. Our findings indicate that the peer effect can be driven by social learning of the common ownership among firms and explain the reason for the rapid increase in green bond issuance.

Green bonds have emerged as a novel funding mechanism specifically aimed at addressing environmental challenges. Focusing on A-share listed companies in China that went public with bond issues domestically from 2012 to 2021, we reveal that companies with higher energy usage and better environmental disclosure quality are the most inclined to issue green bonds. Such issuance is identified as a pathway towards real green transformation, markedly boosting the green transformation index, green innovation efficiency, and ESG performance. Further analysis indicates that the effect of substantial transformation is particularly pronounced among companies in the eastern regions of China.

We construct a new geospatial measure using high-resolution river vector data from National Geomatics Center of China (NGCC) to study how urban riparian exposure shapes local government debt financing costs. Our base-line results show that cities with higher riparian exposures have significantly lower credit spreads, with a one-standard-deviation increase in riparian exposure reducing credit spreads by approximately 12 basis points. By comparing cities crossed by natural rivers with those intersected by artificial canals, we disentangle the dual role of riparian zones as sources of natural capital benefits (e.g., enhanced transportation capacity) versus climate risks (e.g., flood vulnerability). We find that climate change has amplified the impact of natural disasters, such as floods and droughts, particularly in riparian zones, thus weakening the cost-reducing effect of riparian exposure on bond financing. In contrast, improved water infrastructure and flood-control facilities strengthen the cost-reduction effect. Our findings contribute to the literature on natural capital and government financing, offering valuable implications for public finance and risk management.

Green bonds, pivotal to green finance, draw growing attention from scholars and investors. Social media’s proliferation has amplified the influence of investor sentiment, necessitating robust analysis of its market impact. However, general sentiment lexicons often fail to capture domain-specific slang and nuanced expressions unique to China’s bond market, leading to inaccuracies in sentiment analysis. Thus, this study constructs a specialized sentiment lexicon for the green bond market, namely the COBC (Chinese online bond comments sentiment lexicon), to dissect bond market slang and investor remarks. Compared to three general lexicons (Textbook, SnowNLP, and VADER), it improves the average prediction accuracy by approximately 87.2% in sentiment analysis of Chinese online language within the green bond domain. Sentiment scores derived from COBC-based dictionary analysis are systematically integrated as predictive features into a two-stage hybrid predictive model is proposed integrating Support Vector Machine (SVM), Auto-Regressive Moving Average (ARMA), Bidirectional Long Short-Term Memory Networks (BiLSTM), and Attention Mechanisms to forecast China's green bond market, represented by the China Bond 45 Green Bond Index. First, ARMA-SVR is employed to extract residuals and statistical features from the green bond index. Then, the BiLSTM-Attention model is applied to assess the impact of investor sentiment on the index. Empirical results show that incorporating investor sentiment significantly enhances the predictive accuracy of the green bond index, achieving an average of 67.5% reduction in Mean Squared Error (MSE), and providing valuable insights for market participants and policymakers.

This paper examines bond trading activity and transaction cost differences between the bilateral Over-the-Counter (OTC) and the centralized Central Limit Order Book (CLOB) venues in the China interbank government bonds market, structured as all-to-all. Using a novel trade-level dataset, we estimate that CLOB reduces transaction costs by 0.66 basis points compared to OTC, highlighting the efficiency of its centralized trading mechanism. Furthermore, our analysis of cross-venue selection patterns reveals that the CLOB venue disproportionately facilitates core traders, orders with standardized sizes and settlement speeds, and newly issued bond trades. Despite CLOB’s cost advantages, the continued use of OTC is justified by its unique benefits, including mitigating information leakage, enabling designated counterparties, and facilitating position rebalancing. These findings offer insights into how market microstructure and trading mechanism affect asset liquidity.

This research examines the impact of short selling on the financing cost of corporate bonds using panel data from Chinese A-share listed companies spanning the period from 2007 to 2022. The study aims to investigate the potential cross-market information spillover effects within the short selling system. The findings indicate that short selling significantly reduces the financing cost of corporate bonds, with a more pronounced effect observed under greater short selling forces. The robustness of the results is confirmed by controlling for various potential influencing factors and addressing the endogeneity issue through Propensity Score Matched Difference in Differences (PSM-DID) methodology. Moreover, the research reveals that the alleviation of information asymmetry serves as the primary mechanism through which short selling exerts its impact, particularly in regions with well-developed financial markets and favorable legal environments. This study offersa novel perspective of short selling in China and it sheds light on its cross-market spillover effects. By effectively enhancing resource allocation efficiency in capital markets, short selling emerges as a potent tool for mitigating information disparities between bond investors and enterprises.

This paper analyzes the impact of risk disclosures in bond prospectuses on the credit risk premium in the Chinese corporate bond market through six textual characteristics comprehensively. In the empirical analysis, the collected 5199 bond prospectuses and structured data concerning control variables from 2006 to 2021 are used to perform the fixed effect regression analysis. The results show that fewer Words, less Boilerplate, higher Fog Index, more HardInfoMix, more Redundancy, and higher Specificity of risk disclosures in bond prospectuses will lead to a higher credit risk premium. Further tests demonstrate that ceteris paribus, the negative impact of Words and Boilerplate will be strengthened by implicit government guarantees carried by a state-owned enterprise but be weakened by better corporate business performance. However, ceteris paribus, positive effects of the Fog Index, HardInfoMix, Redundancy, and Specificity will be weakened when the bond issuer is state-owned but be strengthened by better corporate business performance.

We investigate the effect of third-party certification for green bonds by analyzing its impact on issuer's future green innovation performances. We find that third-party certification for green bonds can significantly promote issuer's future green innovation performances. Furthermore, the promotion effect is more prominent in non-state-owned issuers, large issuers and heavy polluting issuers, and can be more significantly exerted by professional and reputable third-party certification agencies. Besides, third-party certification for green bonds can play the effect by reducing the issuer's tax expenditure, increasing the issuer's loan financing, and receiving a positive response in stock returns. But unexpectedly, it cannot play the effect by further reducing the credit spread of green bonds. Our findings indicate that independent external supervision can play a positive role in green bond issuance, but there is still a long way to go.

This paper revisits the default-crash risk relation in the context of China. We find that firms with higher default risk have lower stock price crash risk both in monthly and yearly frequencies. To identify the causal effect, we use the first-ever default event in China’s onshore bond market in 2014 as an exogenous shock to the strength of implicit guarantees. The negative relation arises from the active involvement of the government before 2014 and creditors after 2014 in corporate governance. Consistent with the external scrutiny mechanism, the impact of default risk on stock price crashes is stronger in situations in which creditors are more likely to engage in active monitoring (i.e., firms with higher liquidation costs, lower liquidation value, and higher levels of information asymmetry), with these effects primarily observed in the post-2014 period. Overall, our study highlights the role of the “invisible hand” in the absence of the “visible hand.”

This paper investigates whether increased female representation on corporate boards affects firms’ bond financing costs. Exploiting the 2017 Big Three’s campaigns as a plausibly exogenous shock, we document that firms experiencing larger increases in female board representation, induced by the campaigns, experience significant reductions in bond yield spreads and improvements in credit ratings. We identify reduced leverage and enhanced workplace environment as key mechanisms, and show that the effects are stronger among firms with greater tail risk and information asymmetry. An alternative identification strategy based on California’s SB 826 regulatory mandate yields consistent results. Our findings suggest that board gender diversity enhances governance in ways valued by credit markets.