Does the issuance of green bonds promote green practices among peer companies? Evidence from China's listed companies

In China's green finance system, green bonds, which strive to achieve balanced development of ecological and economic goals, play a key role in promoting sustainable development. Using ESG data on Chinese listed companies from 2009 to 2022, this paper examines whether green bonds issued by companies encourage their peers to adopt green practices. And then, based on the multi-temporal Difference-in-Differences (DID) approach, this paper explores the underlying mechanisms and heterogeneous effects of this peer influence. The results show that green bond issuance has a significant positive impact on the green practices of peer companies, and its robustness has been confirmed through various tests. Peer effects are primarily driven by competition and access to information, which is particularly evident in highly competitive industries and companies with common institutional investors. In addition, the impact of green bonds issued by industry leaders or high-polluting enterprises will be greater. In order to promote sustainability in different business types and regions, specific policy implications are provided based on these insights: strengthening the green bond guarantee system, fostering market leadership, and implementing targeted regulations.