TY - BOOK ID - 133438969 TI - Green Bond Pricing and Greenwashing under Asymmetric Information AU - Schmittmann, Jochen M. AU - Gao, Yun. PY - 2022 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Macroeconomics KW - Economics: General KW - Environmental Economics KW - Taxation KW - Investments: Bonds KW - Environmental Conservation and Protection KW - Asymmetric and Private Information KW - Information and Market Efficiency KW - Event Studies KW - Financing Policy KW - Financial Risk and Risk Management KW - Capital and Ownership Structure KW - Value of Firms KW - Goodwill KW - Environment and Development KW - Environment and Trade KW - Sustainability KW - Environmental Accounts and Accounting KW - Environmental Equity KW - Population Growth KW - Environmental Economics: General KW - Taxation and Subsidies: Externalities KW - Redistributive Effects KW - Environmental Taxes and Subsidies KW - Climate KW - Natural Disasters and Their Management KW - Global Warming KW - General Financial Markets: General (includes Measurement and Data) KW - Price Level KW - Inflation KW - Deflation KW - Economic & financial crises & disasters KW - Economics of specific sectors KW - Green finance / sustainable finance KW - Public finance & taxation KW - Investment & securities KW - Environmental economics KW - Climate change KW - Climate finance KW - Environment KW - Carbon tax KW - Taxes KW - Bonds KW - Financial institutions KW - Greenhouse gas emissions KW - Currency crises KW - Informal sector KW - Economics KW - Climatic changes KW - Environmental impact charges KW - Emissions trading KW - Greenhouse gases KW - Japan UR - https://www.unicat.be/uniCat?func=search&query=sysid:133438969 AB - We analyze the corporate green bond market under a rational framework without an innate green preference, using a simple adverse selection model. Firms can use green bonds to signal their green credentials to investors. Transition risk stems from uncertainty over the introduction of carbon pricing. We show that green bonds have a price premium over conventional bonds when there are information asymmetry, transition risk, and it is costly to engage in greenwashing, that is, false or exaggerated claims of being green. The extent of greenwashing in the market is a function of the green bond premium. A swift and gradual implementation of carbon pricing generates a small green bond premium and a low level of greenwashing, while delayed and large carbon pricing has an ambiguous effect on both. The model provides a rich set of policy implications, notably the need for swift action on carbon pricing and strong information disclosures and regulations to ensure the integrity of green bonds. ER -