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Green innovation and IPO return: Evidence from China

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  • Meng, Qingbin
  • Peng, Tong
  • Song, Xuan
  • Wang, Song

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.

Suggested Citation

  • Meng, Qingbin & Peng, Tong & Song, Xuan & Wang, Song, 2024. "Green innovation and IPO return: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 660-677.
    • Handle: RePEc:eee:reveco:v:93:y:2024:i:pa:p:660-677
    DOI: 10.1016/j.iref.2024.03.043
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