This paper provides the firstevidence of the debt and stock market reaction to corporate green bond issuancein the simultaneously largest developing economy and largest emerging debtmarket, China. Utilizing a most comprehensive sample of Chinese green bonds, wedocument a pricing premium of corporate green bonds relative to conventionalbonds. The economic magnitude of the Chinese green bond pricing premium isgreatly larger than that of an international green bond documented in priorstudies. The pricing premium of corporate green bonds is most pronounced fornew issues from high corporate social responsibility (CSR) issuers andunderwriters. It is also stronger for corporate issuers with less ownershipconcentration and held by long-term institutional investors. Further analysisreveals positive announcement stock returns for green bond new issues,consistent with the stakeholder value maximization theory that corporateengagement in sustainable financing practice increases firm value in a long runand thus is favored by shareholders.