Datum
2021-06-01Schlagwort
330 Wirtschaft Corporate Social ResponsibilityBörseGoing PublicNachhaltigkeitWirtschaftsethikWertorientiertes ManagementMetadata
Zur Langanzeige
Aufsatz
ESG Disclosure and Idiosyncratic Risk in Initial Public Offerings
Zusammenfassung
Although legitimacy theory provides strong arguments that environmental, social and governance (ESG) disclosure and performance can help mitigate firm-specific (idiosyncratic) risks, this relationship has been repeatedly challenged by conceptual arguments, such as ‘transparency fallacy’ or ‘impression management’, and mixed empirical evidence. Therefore, we investigate this relationship in the revelatory case of initial public offerings (IPOs), which represent the first sale of common stock to the wider public. IPOs are characterised by strong information asymmetry between firm insiders and society, while at the same time suffering from uncertainty in firm legitimacy, culminating in amplified financial risks for both issuers and investors in aftermarket trading. Using data from the United States, we demonstrate that (1) voluntary ESG disclosure reduces idiosyncratic volatility and downside tail risk and (2) higher ESG ratings have lower associated firm-specific volatility and downside tail risk during the first year of trading in the aftermarket. We provide theoretical arguments for the relationships observed, suggesting that companies striving for ESG performance and communicating their efforts signal their compliance with sustainability-related norms, thus acquiring and upholding a societal license to operate. ESG performance and disclosure help companies build their reputation capital with investors after going public. We also report that ESG disclosure is a more consistent proxy for ex-ante uncertainty as an indicator of aftermarket risk, thereby replacing some of the more conventional measures, such as firm age, offered in the existing literature.
Zitierform
In: Journal of Business Ethics Volume 179 / issue 3 (2021-06-01) , S. 867-886 ; eissn:1573-0697Förderhinweis
Gefördert im Rahmen des Projekts DEALZitieren
@article{doi:10.17170/kobra-202208196695,
author={Reber, Beat and Gold, Agnes and Gold, Stefan},
title={ESG Disclosure and Idiosyncratic Risk in Initial Public Offerings},
journal={Journal of Business Ethics},
year={2021}
}
0500 Oax 0501 Text $btxt$2rdacontent 0502 Computermedien $bc$2rdacarrier 1100 2021$n2021 1500 1/eng 2050 ##0##http://hdl.handle.net/123456789/14081 3000 Reber, Beat 3010 Gold, Agnes 3010 Gold, Stefan 4000 ESG Disclosure and Idiosyncratic Risk in Initial Public Offerings / Reber, Beat 4030 4060 Online-Ressource 4085 ##0##=u http://nbn-resolving.de/http://hdl.handle.net/123456789/14081=x R 4204 \$dAufsatz 4170 5550 {{Corporate Social Responsibility}} 5550 {{Börse}} 5550 {{Going Public}} 5550 {{Nachhaltigkeit}} 5550 {{Wirtschaftsethik}} 5550 {{Wertorientiertes Management}} 7136 ##0##http://hdl.handle.net/123456789/14081
2022-08-19T07:18:21Z 2022-08-19T07:18:21Z 2021-06-01 doi:10.17170/kobra-202208196695 http://hdl.handle.net/123456789/14081 Gefördert im Rahmen des Projekts DEAL eng Namensnennung 4.0 International http://creativecommons.org/licenses/by/4.0/ ESG sustainability initial public offerings idiosyncratic risk information asymmetry legitimacy ethical business conduct 330 ESG Disclosure and Idiosyncratic Risk in Initial Public Offerings Aufsatz Although legitimacy theory provides strong arguments that environmental, social and governance (ESG) disclosure and performance can help mitigate firm-specific (idiosyncratic) risks, this relationship has been repeatedly challenged by conceptual arguments, such as ‘transparency fallacy’ or ‘impression management’, and mixed empirical evidence. Therefore, we investigate this relationship in the revelatory case of initial public offerings (IPOs), which represent the first sale of common stock to the wider public. IPOs are characterised by strong information asymmetry between firm insiders and society, while at the same time suffering from uncertainty in firm legitimacy, culminating in amplified financial risks for both issuers and investors in aftermarket trading. Using data from the United States, we demonstrate that (1) voluntary ESG disclosure reduces idiosyncratic volatility and downside tail risk and (2) higher ESG ratings have lower associated firm-specific volatility and downside tail risk during the first year of trading in the aftermarket. We provide theoretical arguments for the relationships observed, suggesting that companies striving for ESG performance and communicating their efforts signal their compliance with sustainability-related norms, thus acquiring and upholding a societal license to operate. ESG performance and disclosure help companies build their reputation capital with investors after going public. We also report that ESG disclosure is a more consistent proxy for ex-ante uncertainty as an indicator of aftermarket risk, thereby replacing some of the more conventional measures, such as firm age, offered in the existing literature. open access Reber, Beat Gold, Agnes Gold, Stefan doi:10.1007/s10551-021-04847-8 Corporate Social Responsibility Börse Going Public Nachhaltigkeit Wirtschaftsethik Wertorientiertes Management publishedVersion eissn:1573-0697 issue 3 Journal of Business Ethics 867-886 Volume 179 false
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