Does it Make You Better Off? Initial Public Offerings (IPOs) and Corporate Sustainability Performance: Empirical Evidence

Going public (or an IPO) is a strategic decision for value creation motivated by various reasons such as capital raising, windows of opportunities that reflect the perfect market timing and publicity. It is associated with financial and business attributes. In this article, we establish an original linkage between the IPO event and sustainability performance post-IPO, emphasizing the impacts of listing on enhancing sustainability performance. We integrate IPO theories and sustainability views in explaining the effect of the IPO on sustainability measures. We study a sample of Italian firms that went public from 2009 to 2018. Sustainability performance is measured by a sustainability rating which is a composite rating that comprises of 10 elements. Using empirical testing, we show a positive effect of the IPO on sustainability and governance indicators in the 3 years following the IPO, suggesting an image-improving and better compliance practices. And a mixed impact on financial performance.