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Climate change disclosure and the information environment in the initial public offering market

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  • Jerry W. Chen
  • Eunice S. Khoo
  • Zihang Peng

Abstract

We investigate whether climate change disclosures in initial public offering (IPO) prospectuses affect the information environment in the IPO market. We find that climate change disclosures are associated with lower IPO underpricing. Further analyses reveal that reputable underwriters and the Securities Exchange Commission's Commission Guidance Regarding Disclosure Related to Climate Change enhance the information role of climate change disclosures in the IPO market. We demonstrate that firms with more extensive climate change disclosures provide stronger hedging benefits against climate change risks in the post‐IPO period. Overall, our results support the crucial role of climate change disclosures in improving the information environment of the IPO market.

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  • Jerry W. Chen & Eunice S. Khoo & Zihang Peng, 2023. "Climate change disclosure and the information environment in the initial public offering market," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(S1), pages 907-952, April.
    • Handle: RePEc:bla:acctfi:v:63:y:2023:i:s1:p:907-952
    DOI: 10.1111/acfi.13085
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    2. Chengyun Liu & Ziting Zhou & Kun Su & Ke Liu & Hui An, 2024. "Water risk and financial analysts' information environment: Empirical evidence from China," Business Strategy and the Environment, Wiley Blackwell, vol. 33(2), pages 1265-1304, February.

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