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|The impact of environmental disclosure on initial public offering underpricing: sustainable development in Singapore
Lam, Nguyen Bao
|Kang, E. & Lam, N. B. (2022). The impact of environmental disclosure on initial public offering underpricing: sustainable development in Singapore. Corporate Social Responsibility and Environmental Management. https://dx.doi.org/10.1002/csr.2342
|Corporate Social Responsibility and Environmental Management
|This study applies signaling theory to examine the impact of environmental disclosures on equity underpricing at initial public offerings (IPO) when private firms list on stock exchanges. Firms often under-price their shares to attract investors as IPOs have high information asymmetry between firms and investors. Using a linguistic technique on environmental disclosures in prospectuses from 2009 to 2019 in the Singapore Exchange, we find that disclosures with a positive tone correlate with lower underpricing, but only if these disclosures are authentic. This finding is robust to different model specifications and measurements. We provide new evidence that linguistic features, that is, tone and authenticity, interact to influence a key IPO outcome. The results suggest that investors are not easily attracted by positive disclosure tones but are also concerned with the authenticity of such disclosures. This finding informs firms and various stakeholders navigating the nascent and growing wave of sustainability reporting in Singapore.
|Nanyang Business School
School of Civil and Environmental Engineering
|© 2022 ERP Environment and John Wiley & Sons Ltd. All rights reserved.
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|CEE Journal Articles
NBS Journal Articles
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