Are Green Ipos Underpriced in Alternative Investment Markets?

The notion of green financing has generally evolved around environmental sustainability and protection. This concept needs to be investigated from the perspective of “sustainably” achieving economic targets and simultaneously protecting the globe for future generations. Building on this premise, this study argues that the greenness of initial public offering (IPOs) helps ensure simultaneous environmental and economic sustainability in the short and long run. Applying stochastic frontier analysis, three stage least square, and Johnson co-integration techniques, we explore the strong governance of firms that leads to greenness and environmental consciousness, which causes pricing efficiency of green IPOs in the primary market and, subsequently, higher performance in secondary markets. We find a co-movement of IPO greenness and short- and long-run aftermarket pricing performance, while green consciousness contributes more to long-run economic sustainability