Not in my Backyard? Does Investor Location and Stakeholder Emphasis Impact Reactions to Sustainability Bonds?

• In Event: Impact of Managers, Analysts, and Stakeholders on Investors

Abstract

Issuances of sustainability bonds, which raise funds for positive social projects with environmental benefits, have rapidly grown in recent years. However, little is known about how investors’ characteristics influence their perceptions of these investments. We examine how investors’ geographic proximity, in combination with the issuers’ emphasis on value creation for either shareholder or community stakeholders, impacts investment perceptions and judgments. We predict that investment judgments are lowest when investors are geographically distant from the project funded by the bond and the issuer’s management emphasizes the bond's benefits for community stakeholders. Results of an experiment confirm our prediction. Overall, our study highlights the potential for investor characteristics and managers’ voluntary disclosure choices to impact perceptions of sustainability bonds.

Authors

• Jonathan Jona, Tulane University

• Serena Loftus, Kent State University

• Yulin Zhu, Kent State University