Does Climate Change Risk Influence the Performance of Newly Listed Firms?
Posted: 1 May 2023
Date Written: April 1, 2023
Abstract
We examine the impact of climate change risk on the performance of newly listed firms. Using a sample of IPO firms from 2000 to 2020, we find that the volume of firms going public is higher when the climate risk is lower. Similarly, IPOs located in states with more exposure to climate risk are associated with lower under-pricing. Our results show that climate change risk is an important risk factor, that adversely affects post-IPO performance and should be considered when listing on the stock market. Our results are robust to endogeneity, various model specifications, and firm-level measures of climate change exposure.
Keywords: Climate Change Risk, ESG, IPOs, Underpricing, Long-term Performance
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