Greenness in the Eye of Bond Short Sellers

Key Points

• This research explores the relationship between short selling activities and the perceived value of green bonds compared to conventional bonds.
• Analyzed shorting volumes of green bonds versus conventional bonds issued by the same firm.
• Considered explanations such as market frictions and demand pressures for bonds.
• Found significantly higher shorting volumes for green bonds relative to traditional bonds.
• Identified a puzzle as existing explanations could not clarify the increased shorting volumes.