Oct 2024
We investigate whether the sustainability profile of a firm affects the terms at which the firm list on a stock market. Given the evidence that sustainable firms have a lower cost of capital, we expect this to also be reflected in the issue terms at an IPO. The laboratory for our investigation is stock listings (IPOs) at Euronext Oslo. We find that firms which emphasize environmental issues (ESG) in their prospectus have lower implied cost of capital. We find no link between the degree of underpricing and ESG issues. We also provide evidence on recent changes in the IPO landscape, where pure listings are becoming more common, and stock exchanges introduce tiered markets that attract younger and smaller companies.
Keywords: IPO; Cost of Capital; Underpricing; ESG; Euronext Oslo
JEL Codes: G30; G12; G24
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