The impact of green bond issuances on green mergers and acquisitions of peer firms

Abstract

This study investigates the impact of green bond issuances on green mergers and acquisitions (GM&As) of peer firms. Using data from China's A-share listed firms from 2012 to 2022, we employ staggered DID model to demonstrate that green bond issuances can stimulate GM&A activities of peer firms. The stimulating effect is mainly attributable to competition rather than environmental penalty pressure. Green bond issuances also raise executives' environmental awareness and attract greater attention from green investors in peer firms, thereby reinforcing GM&A activities. The effect is more pronounced for firms located in regions with stricter environmental regulation, with greater media attention, and classified as heavily polluting. Moreover, GM&As enable peer firms to significantly enhance their green technological innovation and environmental performance. These findings provide new evidence on how green financial instruments shape firms' strategic behaviour and offer implications for a more effective green finance system.