Does Green Bond Issuance Enhance Market Return of Equity Shares in the Indian Stock Market?*

Abstract This study examines the announcement effect of a green bond on the issuer's stock returns in the Indian Stock Market. The event study methodology for data analysis and abnormal returns were calculated using the market model for the 16‐day event window that includes the 5 days prior and 10 days after the issuance of the green bonds. The findings of this study show that green bond announcements do not create any significant abnormal returns, thus suggesting investors' irrationality toward environmental factors. This study informs policymakers that investor education relating to the environment is needed in India.