Does sustainable development matter for initial public offering underpricing?

Thomas J. Boulton

Business Strategy and the Environment, 2024, vol. 33, issue 8, 8361-8387

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.

Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1002/bse.3915

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:bstrat:v:33:y:2024:i:8:p:8361-8387

Ordering information: This journal article can be ordered from
http://onlinelibrary ... 1002/(ISSN)1099-0836

Access Statistics for this article

Business Strategy and the Environment is currently edited by Richard Welford

More articles in Business Strategy and the Environment from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().