{"title":"Does sustainable development matter for initial public offering underpricing?","authors":"Thomas J. Boulton","doi":"10.1002/bse.3915","DOIUrl":null,"url":null,"abstract":"While many countries have made significant strides toward meeting the United Nations Sustainable Development Goals (SDGs), others continue to struggle to make progress. We connect progress toward the SDGs with capital market outcomes for firms going public. We find that the degree of underpricing in initial public offerings (IPOs) is lower in countries that are closer to achieving the SDGs, particularly those focused on economic and social outcomes. The relation between SDG progress and underpricing is sensitive to IPO characteristics associated with uncertainty, and country‐level indicators of democracy and cultural attributes. SDG progress is also associated with important IPO characteristics correlated with uncertainty, including offer prices, underwriter reputation, VC backing, offer size, and underwriter spreads. Together, our results support the hypothesis that SDG progress reduces uncertainty for investors, which lowers the cost of capital for IPO firms.","PeriodicalId":9518,"journal":{"name":"Business Strategy and The Environment","volume":null,"pages":null},"PeriodicalIF":12.5000,"publicationDate":"2024-08-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Business Strategy and The Environment","FirstCategoryId":"91","ListUrlMain":"https://doi.org/10.1002/bse.3915","RegionNum":1,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS","Score":null,"Total":0}
引用次数: 0
Abstract
While many countries have made significant strides toward meeting the United Nations Sustainable Development Goals (SDGs), others continue to struggle to make progress. We connect progress toward the SDGs with capital market outcomes for firms going public. We find that the degree of underpricing in initial public offerings (IPOs) is lower in countries that are closer to achieving the SDGs, particularly those focused on economic and social outcomes. The relation between SDG progress and underpricing is sensitive to IPO characteristics associated with uncertainty, and country‐level indicators of democracy and cultural attributes. SDG progress is also associated with important IPO characteristics correlated with uncertainty, including offer prices, underwriter reputation, VC backing, offer size, and underwriter spreads. Together, our results support the hypothesis that SDG progress reduces uncertainty for investors, which lowers the cost of capital for IPO firms.
期刊介绍:
Business Strategy and the Environment (BSE) is a leading academic journal focused on business strategies for improving the natural environment. It publishes peer-reviewed research on various topics such as systems and standards, environmental performance, disclosure, eco-innovation, corporate environmental management tools, organizations and management, supply chains, circular economy, governance, green finance, industry sectors, and responses to climate change and other contemporary environmental issues. The journal aims to provide original contributions that enhance the understanding of sustainability in business. Its target audience includes academics, practitioners, business managers, and consultants. However, BSE does not accept papers on corporate social responsibility (CSR), as this topic is covered by its sibling journal Corporate Social Responsibility and Environmental Management. The journal is indexed in several databases and collections such as ABI/INFORM Collection, Agricultural & Environmental Science Database, BIOBASE, Emerald Management Reviews, GeoArchive, Environment Index, GEOBASE, INSPEC, Technology Collection, and Web of Science.