ESG Government Risk and International IPO Underpricing

62 Pages Posted: 27 Mar 2021 Last revised: 21 Apr 2021

See all articles by Edward Baker

Edward Baker

Mesirow Financial Investment Management

Thomas J. Boulton

Miami University

Marcus V. Braga-Alves

Pace University - Lubin School of Business

Matthew R. Morey

Pace University - Lubin School of Business - Department of Finance and Economics

Date Written: February 14, 2020

Abstract

We study the association between environmental, social, and governance (ESG) government risk management and firm-level IPO underpricing between 2008 and 2018. Examining 7,446 IPOs issued in 36 countries, we find that IPO underpricing tends to be lower in countries with higher ESG Government Ratings. When we uniquely examine the environmental, social, and governance pillars, we find that underpricing tends to be lower in countries with stronger risk management practices in each of these areas. Additional analysis indicates that the negative impact of ESG ratings on IPO underpricing is more pronounced in countries with more transparent financial disclosures, higher liability standards, and stronger shareholder protections.

Keywords: ESG, initial public offerings, underpricing

JEL Classification: G12, G15, G18, M14

Suggested Citation

Baker, Edward and Boulton, Thomas J. and Braga-Alves, Marcus V. and Morey, Matthew R., ESG Government Risk and International IPO Underpricing (February 14, 2020). Journal of Corporate Finance, Vol. 67, April, 2021., Available at SSRN: https://ssrn.com/abstract=3786813

Edward Baker

Mesirow Financial Investment Management ( email )

350 N. Clark
Chicago, IL 60610
United States

Thomas J. Boulton (Contact Author)

Miami University ( email )

3028 Farmer School of Business
Oxford, OH 45056
United States
(513) 529-1563 (Phone)
(513) 529-8598 (Fax)

Marcus V. Braga-Alves

Pace University - Lubin School of Business ( email )

1 Pace Plaza
New York, NY 10038-1502
United States

Matthew R. Morey

Pace University - Lubin School of Business - Department of Finance and Economics ( email )

One Pace Plaza
New York, NY 10038-1502
United States
212-618-6471 (Phone)

HOME PAGE: http://webpage.pace.edu/mmorey/

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