Is Voluntary Third-party Certification Worth It for Corporate Green Bond Issue? –An Investigation of Chinese Green Bond Market

Shaoqian Xu¹ , Hao Wu² , Nan Zhang³

Section:Research Paper, Product Type: Journal-Paper
Vol.8 , Issue.3 , pp.25-30, Sep-2020

Online published on Sep 30, 2020

Copyright © Shaoqian Xu, Hao Wu, Nan Zhang . This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
 

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Abstract :
The Chinese companies may hire a third-party agency in order to assess whether the project implemented “green” or not, when planning to issue the corporate green bond, voluntarily. Previously, the literature on third-party certification of corporate green bonds in China was mostly qualitative analysis with few empirical analysis, this article employed China`s corporate green bonds as a sample to examine the impact of third-party certification on the issuance costs of corporate green bonds. Even though it is not mandatory in the bond issuance process, as an extra cost on certification, we found that the certification can enhance the credibility of corporate green bonds and attract more responsible investors, in details, after controlling other influential factors, the issuance cost of a corporate green bond with a third party certification was significantly reduced; however, for a corporate green bond with lower credit rating, the third-party certification cannot function as a credit endorsement and reduce its issuance cost. Furthermore, it is worth noting that there are still some problems in the corporate green bond evaluation and certification business, in terms of agency management, quality of certification reports, and comparability of certification conclusions. And the relevant parties may take some measures to solve the existing problems.

Key-Words / Index Term :
Voluntary, Third-party Certification, Issue Cost, Corporate Green Bond, Green Bond Market, China

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