Browsing by Author "Khosravi, Nicolas"

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    Driving Sustainable Finance: The Role of Green Bonds and ESG Performance in European Corporate Finance
    (2024-08-15) Wadman, Alexander; Khosravi, Nicolas; University of Gothenburg/Graduate School; Göteborgs universitet/Graduate School
    This paper aims to examine if European corporations issue green bonds at lower yields compared to their conventional counterparts. Combining propensity score matching and regression analysis, this paper tests three different hypotheses. Using a sample of 4,920 European bonds issued by corporations between the years 2012 to 2022, we find that European corporate green bonds are issued at 25.8 bps lower yields compared to their conventional counterparts and companies with higher ESG scores have been able to issue green bonds at 35.0 bps lower yields on average compared to companies with lower ESG scores. Additionally, one unit increase in Environmental (E) or Governance (G) scores result in a 0.7 and 0.6 bps reduction in yield, respectively, on average. These results have practical implications for our Master thesis partner NOVO Energy but also European companies in terms of which financing to choose for sustainable projects and how to optimize their ESG strategy. Acknowledgement
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    Impact of ESG Score on Cost of Capital - Evidence from the Swedish Market
    (2022-07-01) Khosravi, Nicolas; Wadman, Alexander; University of Gothenburg/Department of Economics; Göteborgs universitet/Institutionen för nationalekonomi med statistik; University of Gothenburg/Department of Business Administration; Göteborgs universitet/Företagsekonomiska institutionen
    This paper aims to examine if there is a significant relationship between Swedish firms ESG scores and their financing costs. By constructing three regression models with WACC, cost of equity and cost of debt as the dependent variables and ESG score as an independent variable, this paper tests three different hypotheses. Using a sample of 468 observations from 157 companies between the years 2015 to 2020, we find a significant negative relationship between ESG scores and both WACC and cost of debt. However, we do not find any significant results for the model with cost of equity. Our results show that Swedish firms are rewarded with lower WACC and cost of debt for their work with sustainability. These results have important practical implications for asset managers, corporations and policymakers. Firstly, asset managers gain valuable information of how a more sustainable firm receives a higher valuation. Secondly, corporations have a rationale to pursue investments in ESG activities as it lowers the cost of debt. Thirdly, the results support how policy makers can strengthen the direction to a sustainable future with effective incentives for stakeholders.