| Abstract: |
This dissertation explores the interaction between corporate sustainability
and corporate finance across three thematic areas. The first thematic area
examines how the publication of the Carbon Disclosure Project’s (CDP) list,
comprising companies that have refused to respond to the questionnaire on
environmental data, affects these companies’ firm value (Chapter 2). Thereby,
this chapter provides insights into whether this non-disclosure campaign
conducted by the CDP is effective in exerting capital market pressure on
companies that refuse to disclose environmental data. The analysis identifies
a significantly negative valuation effect for smaller and less profitable
companies on the CDP’s list. The second thematic area focuses on
sustainability-linked lending (Chapters 3 to 6). Chapters 3 and 4 provide an
overview of the design of the sustainability-related attributes which define
sustainability-linked bonds (SLBs) and sustainability-linked loans (SLLs).
More specifically, these chapters discuss the sustainability targets and the
financial incentivization mechanisms that connect these targets to the
financing terms of these debt products. Subsequently, Chapters 5 and 6 address
empirical questions in sustainability-linked lending. Chapter 5 initially
examines the pricing of SLLs in the debt capital market and finds that SLLs
are priced with initial spreads that are, on average, 9.5 basis points lower
than the initial spreads of conventional loans from the same issuer with
similar characteristics. This pricing advantage for the borrower is greater
for borrowers characterized by a strong environmental profile and for loans
originated with a lending syndicate characterized by strong environmental
characteristics. Chapter 6 investigates the perception of SLB issuances in the
equity market by analyzing abnormal stock returns around the announcement of
SLB issues. The study identifies a positive announcement effect, which however
only remains significant for certain issuers with specific characteristics in
the two subsequent trading weeks. Over this period, issuers with a strong
environmental profile, as well as those that have not issued use-of-proceeds
bonds before the SLB issue, experience significantly more positive stock
market reactions than the corresponding issuers that have weaker environmental
attributes or those that have issued use-of-proceeds bonds previously. The
final thematic area of this dissertation examines the influence of security
class action lawsuits (SCAs) on the corporate governance structures of the
defendant companies’ competitors (Chapter 7). Initially, the study presents
evidence for two benefits resulting from robust governance structures in the
context of corporate litigation. Specifically, the results suggest that robust
corporate governance significantly mitigates the risk of being sued in an SCA
and, in the event of litigation, also protects the value of the defendant
company and to a lower extent that of its competitors. The study argues that
these two benefits of robust governance structures should incentivize the
competitors of SCA defendants to revise their own governance mechanisms
following an SCA in the same industry. Consequently, the study analyzes the
development of the SCA defendants’ industry competitors’ governance mechanisms
after the SCA using a generalized difference-in-difference approach. The
results provide evidence on significantly enhanced governance structures among
the competitors of SCA defendants in the years following the SCA. A deeper
analysis of the individual governance components reveals that the competitors
of SCA defendants particularly enhance the independence of their boards by
increasing the proportion of outside directors and the expertise of their
boards by increasing the proportion of directors with financial or
industry-specific backgrounds. |