PTDoes the climate enter a stock's debut price?
When a company debuts on the stock exchange, its shares often close the first day above the offer price: a discount for those who bought. The research gathered 880 debuts in 25 countries, from 2015 to 2024, and asked whether environmental rules and climate change move this discount. Explained in 12 screens.
Across the 880 debuts, shares closed the first day 45.38% above the offer price on average (Table 3). The R$ 10 price is illustrative.
At the debut, shares tend to come out cheap
Going public (an IPO, initial public offering) means selling shares on the stock exchange for the first time. The company and its banks set an offer price. On the first trading day, the market says what the share is worth.
When the first-day close is above the offer price, there is a debut discount (underpricing): a quick gain for those who bought at the offer. The math is simple: (close − offer) ÷ offer. Drag to see.
It may or may not be on purpose. According to the dissertation, the discount can be a strategy to attract investors and give the shares liquidity, or something unexpected.
Buyers know less than sellers
At the debut, managers know the company from the inside; investors do not. To make up for the doubt, investors ask for a discount. Three finance theories explain this game, and all point to the same remedy: clear, reliable information. Tap the cards.
880 debuts in 25 countries
The research started from 65 countries in an earlier study (Krueger and colleagues, 2024) and kept the 25 with enough IPO data between 2015 and 2024. In 18 of them, the law requires firms to disclose environmental and social practices; in 7, it does not.
Number of IPOs per country (Appendix A). The rule counts from the year it took effect, according to Krueger and colleagues (2024): earlier debuts count as "no rule". Tap a country.
Few debutants show a carbon score, and the scores are low
The CDP (Carbon Disclosure Project) gives firms a score from F to A for how they handle climate issues. It is voluntary: only 145 of the 880 debutants had a score.
The average was 0.86 on a 0-to-8 scale, close to D−: firms that are starting to disclose but do not yet manage their impacts in a structured way. None reached A.
Area proportional to the number of debuts. The models that test all variables together use only these 145, the ones with a score.
Step height: the position on the scale (F = 0 … A = 8), not the number of firms, which the dissertation does not report by score. Score bands from Table 2. Tap a step.
Firms within countries: a two-floor analysis
Debuts in the same country share the same law, economy and climate. So the research uses a multilevel regression: it separates what belongs to each firm (upper floor) from what belongs to the country (lower floor).
Not everything that seemed obvious held up
Before looking, bet: did the research confirm each hypothesis? The card flips with the result of the full model (Table 5, 145 debuts).
More people hit by disasters, a larger discount
The more people a country has affected by climate disasters, the larger the debut discount. For each 1% more people affected, the discount rises by 0.025 percentage points. For the author, investors in countries more exposed to the social effects of climate see more risk and ask for a larger discount.
The number of disasters pointed the other way: more disasters, a smaller discount. For the author, frequent disasters would make the market more cautious. But it is a weak hint that did not hold in the robustness tests (screen 10).
Our simulation. It starts from the sample's average discount (45.38%) and applies the full model's coefficients (people: 0.0251, p < 5%; disasters: −0.1048, p < 10%; Table 5), holding other characteristics constant. It shows association, not cause; it does not predict the discount of a real IPO.
Technology, size, age and auditor also move the discount
The features of the debut itself matter a lot. High-tech firms and larger offerings had larger discounts; older firms and those audited by one of the four big audit firms (the Big Four: PwC, EY, Deloitte and KPMG), smaller ones.
Our conversion of the full model's coefficients (Table 5) into percentage points of discount, for the change shown on each row. Stars: significance at 10% (*), 5% (**) and 1% (***). Tap a row.
Three tests, one result that holds
To see whether the finding depends on the method, the author redid the analysis in two other ways: a simple regression and a logistic regression, which sorts debuts into high or low discount (above or below the median). Among the climate and disclosure variables, only people affected passed all three.
Block height: strength of the evidence (1, 2 or 3 stars). Tables 5 and 6, all with the 145 debuts that have a carbon score. Tap a block.
See the dissertation's coefficients
What changes for those who invest, go public or regulate
At the debut, investors already seem to charge for the social risk of climate. Disclosure rules and carbon scores, however, do not yet show up in the first-day price.
For investors
- The impact of climate on a country's people enters the debut price.
- Looking at this exposure helps make better-informed IPO decisions.
For firms about to go public
- Explaining how the firm handles climate risks can reduce investors' doubts.
- The research suggests adjusting communication to attract funds at the debut.
For regulators and governments
- The results can guide policies on disclosing environmental and climate risks.
- The mandatory rule alone did not change the debut discount. The effect may only appear in the long run, according to the author.
For researchers
- Test other measures: carbon intensity, renewable energy, sustainability committees, signs of greenwashing, heat waves, droughts and floods.
- Also study debuts that close below the offer price.
The climate already enters the debut price, but through its human side: the more people hit by disasters, the larger the discount investors ask for.
What this research does not say
- Only 145 firms with a carbon score. Because the score is voluntary and rare among debutants, the full model uses 145 of the 880 debuts. With little data, it is hard to prove the score's effect. · according to the author
- Long-term effects are left out. Environmental rules and temperature changes may act gradually and not show up in the first-day price. · according to the author
- Association, not cause. The model shows that the discount and people affected move together, holding other variables constant; it does not prove that one causes the other. · our note
- Only debuts with a discount. In the sample, all closed the first day above the offer price (the smallest discount was 0.07%). Debuts that fall are left for future studies. · Table 3 and conclusion
Credits
MEDINA, Rosangela. O efeito da divulgação obrigatória das práticas ambientais e das mudanças climáticas no underpricing de IPO das empresas [The effect of mandatory disclosure of environmental practices and of climate change on firms' IPO underpricing]. Master's dissertation (Business Administration) — Mackenzie Presbyterian University, São Paulo, 2026. Advisor: Prof. Dr. Michele Nascimento Jucá.
Research supported by CAPES (the Brazilian federal agency for graduate education). Data from Capital IQ, Bloomberg, the International Monetary Fund, the Heritage Foundation and the World Bank; analysis in Stata. This version simplifies the work for a general audience; the formulas and full tables are in the original text.