Association Webinars: Green versus Brown Initial Public Offerings: How do green IPOs fare?


Using a unique dataset we examine 'green' and 'brown' energy IPO's in terms of their characteristics, the probability of withdrawal and post-IPO performance. During the 2001-2017 sample period, green firms are less likely to withdraw, indicating a positive market sentiment toward these firms. We find greater Private Equity (PE) and Venture Capital (VC) involvement for green firms and higher levels of retained ownership for green IPOs. This may indicate a poor outlook for brown firms, leading to lower PE and VC involvement and reduced stakes by owners. However, green firms underperform post-IPO, producing significantly more negative BHARs relative to both benchmark indices and brown firms, and significantly lower alphas in the four-factor regressions. We find evidence that this effect is weakening over time, brown IPOs are more heavily discounted and have been more severely impacted by the COVID crisis.


Dr. Ivan Diaz-Rainey is Director of the Climate and Energy Finance Group (CEFGroup) and Associate Professor of Finance at the University of Otago. He is Associate Editor of the Journal of Financial Regulation and Compliance and has previously held academic positions in the UK, Abu Dhabi and Italy. He has conducted research, policy and consultancy work for the ADBI, OECD, E.ON UK plc and ECMI. His research has been published in leading journals, including Climatic Change, Energy Economics and The Energy Journal. His current research interests include; financial regulation and climate, carbon and energy finance.


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