Bonds for a Bluer Tomorrow: Corporate climate concern and its impact on corporate bond maturities

The study examines whether and how corporate climate concern (CCC) affects the maturity of corporate bonds. Based on the information in a company annual report’s management discussion and analysis (MD&A) section, we construct a corporate climate concern index using text analysis methods. The empirical findings indicate that CCC promotes the issuance of longer-term corporate bonds. The findings are robust to controlling for endogeneity issues, and using an alternative CCC measurement and alternative estimation models. A mechanism analysis explains the positive effect of CCC on corporate bond maturity as follows: companies with a high level of concern for climate issues are 1) more inclined to raise funds by issuing longer-term bonds to support their long-term climate management investment plans and 2) more likely to obtain approval for the issuance of longer-term bonds. In addition, we show that the positive effect of CCC on bond maturity is pronounced in firms in better financial conditions and with greater R&D investments.