IDEAS home Printed from https://ideas.repec.org/a/wly/finmar/v32y2023i1p3-19.html
   My bibliography  Save this article

Secret Recipe of IPO survival: ESG disclosure and performance

Author

Listed:
  • Mengchuan Fu
  • Dantong Yu
  • Dan Zhou

Abstract

While ESG initiation and disclosure may help newly listed companies maintain a social license to operate, mitigate information asymmetry, and attract investor attention, it may impose significant costs on initial public offering (IPO) firms and magnify agency problems. Using a sample of 1102 IPOs issued in the U.S and the ESG data from MSCI between 1999 and 2016, the paper empirically tests the competing hypotheses and examines the influence of ESG disclosure and performance on the survivability of IPOs. We document that (1) voluntary ESG disclosure reduces IPO failure risks and improves long‐run performance of IPO; (2) the sooner ESG information is disclosed after the IPO, the greater the likelihood of survival and better long‐run performance; and (3) IPOs with better ESG score are less likely to fail, with the impact largely attributable to the company's social and governance performance. Our findings identify new failure risks for IPOs, supply evidence of value‐relevance of ESG, and provide practical guidance for managers.

Suggested Citation

  • Mengchuan Fu & Dantong Yu & Dan Zhou, 2023. "Secret Recipe of IPO survival: ESG disclosure and performance," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 32(1), pages 3-19, February.
    • Handle: RePEc:wly:finmar:v:32:y:2023:i:1:p:3-19
    DOI: 10.1111/fmii.12169
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/fmii.12169
    Download Restriction: no
    File URL: https://libkey.io/10.1111/fmii.12169?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:finmar:v:32:y:2023:i:1:p:3-19. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.