Investigating the factors determining green bond issuance in emerging markets: Emphasizing the direct and moderating role of board characteristics and ESG performance

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Abstract

The purpose of this study is threefold. First, this paper looks into whether the characteristics of corporate boards influence green bond issuance (GBI). Second, it aims to investigate whether environmental, social, and governance (ESG) performance is the driving force behind the GBI. Third, this study examines how ESG and its dimensions moderate GBI and board characteristics. Using logistic and panel regression on a sample of firms listed on the National Stock Exchange of India (NSE) between 2012 and 2023, we find that Indian boards are still reluctant to issue green bonds, owing to the understanding that Indian investors are price-sensitive, preferring conventional brown bonds with higher returns over GBI with lower returns. However, our findings indicate that GBI in emerging economies is positively related to ESG performance implying that regulatory requirements to enhance ESG scores force firms to explore GBI. The results underscore the moderating effect of ESG on the relationship between board characteristics and GBI is positive.

Keywords: Green Bonds, ESG, Green Bond Issuance, Board Characteristics, Corporate Governance

Authors’ individual contribution: Conceptualization — A.V.N.B., A.A., and A.S.; Methodology — A.V.N.B. and A.S.; Software — A.S. and A.K.; Validation — A.V.N.B., A.A., and A.S.; Formal Analysis — A.S.; Investigation — A.V.N.B. and A.A.; Resources — A.S. and A.K.; Data Curation — A.K.; Writing — A.V.N.B. and A.S.; Visualization — A.S.; Supervision — A.V.N.B.; Project Administration — A.V.N.B.; Funding Acquisition — A.V.N.B.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: C50, D22, Q54

Received: 06.10.2024
Accepted: 17.12.2024
Published online: 20.12.2024

How to cite this paper: Biju, A. V. N., Alora, A., Sasidharan, A., & Kallany, A. (2024). Investigating the factors determining green bond issuance in emerging markets: Emphasizing the direct and moderating role of board characteristics and ESG performance. Corporate Ownership & Control, 21(4), 60–74. https://doi.org/10.22495/cocv21i4art6