Return to search

Greenium as a Sustainability Market Indicator : A Quantitative Study Examining its Influence on ESG Adoption in Small Cap U.S. Firms

Background: With increasing environmental concerns, green finance has emerged as a key driver for promoting corporate sustainable initiatives. Among these green financing options, green bonds have gained increased popularity. Given the expanding demand for green bonds compared to conventional bonds, a potential yield difference between these two financial instruments is argued, giving rise to the phenomenon known as the Greenium. Similarly, at the corporate level, firms experience a higher propensity to present themselves as environmentally friendly to capitalize on this sustainability preference. This can be achieved through the integration of ESG incentives into their operation.  Purpose: This thesis aims to investigate whether a predictable probability exists between the Greenium and the incentives of U.S. Small Cap companies to adopt an initial ESG score. Such a relationship would imply that the Greenium could serve as a market indicator predicting corporations’ response to increasing sustainability demand. Method: To address the purpose, this thesis uses a quantitative strategy with a positivistic deductive approach and utilizes a panel data logit model with a binary dependent variable. The main data consists of the companies' reported financial performance for each firm-year until it receives the initial ESG score, collected for the period 2015 to 2023 for U.S. Small Cap firms.  Conclusion: The findings advocate a positive effect of the Greenium, serving as a sustainability market indicator, on the probability of Small Cap U.S. firms adopting an initial ESG score; however, its effect is industry related. Certain industries are observed to demonstrate a greater response to increases in the Greenium, with the Consumer Cyclicals industry exhibiting the strongest relationship.

Identiferoai:union.ndltd.org:UPSALLA1/oai:DiVA.org:hj-64516
Date January 2024
CreatorsBlennow, Martin, Carlqvist, Emma
PublisherJönköping University, IHH, Företagsekonomi
Source SetsDiVA Archive at Upsalla University
LanguageEnglish
Detected LanguageEnglish
TypeStudent thesis, info:eu-repo/semantics/bachelorThesis, text
Formatapplication/pdf
Rightsinfo:eu-repo/semantics/openAccess

Page generated in 0.0024 seconds