Greening IPOs: An investigation of the impact of environmental verification on pollution reduction

Yupeng Yang, Xingxing Chen, Lidan Li and Xianzhong Song

Research in International Business and Finance, 2025, vol. 76, issue C

Abstract: This study applies organizational imprinting theory to examine the impact of a firm’s pre-IPO environmental verification failures on its post-IPO environmental performance. Our findings indicate that firms that experience multiple pre-IPO environmental verifications leave a lasting imprint of environmental legitimacy, which serves as a catalyst for reducing sulfur dioxide emissions after going public. Mechanism analyses suggest that this effect is primarily achieved through increased investments in environmentally friendly machinery, the generation of more green patents, and improved green total factor productivity. Heterogeneity tests reveal that the impact of the environmental legitimacy imprinting is more pronounced in areas with stricter environmental regulations. Additionally, the influence of the pre-IPO environmental verification failures is more significant for firms with higher IPO financing amounts, longer IPO delays, and younger company ages. Overall, this paper provides evidence of green practices in capital markets and emphasizes the importance of enhancing the environmental responsibility of listed companies and promoting a greener capital market.

Keywords: Environmental verification; Heavy polluting firms; Sulfur dioxide emissions; Organizational imprinting theory (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:76:y:2025:i:c:s0275531925000947

DOI: 10.1016/j.ribaf.2025.102838

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