Green innovation and IPO return: Evidence from China

Qingbin Meng, Tong Peng, Xuan Song and Song Wang

International Review of Economics & Finance, 2024, vol. 93, issue PA, 660-677

Abstract: In this paper, we demonstrate a strong valuation effect of corporate green innovation on IPO valuation. Studying the Chinese listed companies, we find that the companies with green innovation, especially in the form of inventive patents, experience lower share underpricing (higher offering price) during the IPO process. The higher valuation of the IPO shares is driven by institutional investors who are willing to pay higher prices based on the information disclosure related to green innovation. This valuation effect is more pronounced for firms with less information accessible and firms with higher costs and legal risks related to environmental issues. Put together, green innovation is an important factor in increasing IPO value.

Keywords: Sustainability; Green innovation; Initial public offering; Market efficiency (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:93:y:2024:i:pa:p:660-677

DOI: 10.1016/j.iref.2024.03.043

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