Green Business Model and Green Media Coverage for a Successful Initial Public Offering: Evidence from the Korean Firms

Abstract

With mounting concerns about sustainability, significant attention has been directed toward research within the green industry domain. However, existing literature on initial public offerings (IPOs) has overlooked a crucial distinction: investors do not perceive all firms operating in green industries equally. Firms with green business models (GBMs) are more attractive to investors by providing positive signals of future growth potential and sustainability. To reveal this, the study investigates the relationship between GBMs and IPO success by Ordinary Least Squares (OLS) regression analysis. As the Asia-Pacific IPO market accounts for about 60% of IPO volume and value, with Korea actively participating in this global surge, the study used a sample of 150 firms that underwent IPOs between 2016 and 2019 on the Korea Securities Dealers Automated Quotations (KOSDAQ) market. We find evidence that firms with GBMs are more likely to achieve successful IPO outcomes, and GMC also plays a positive moderating role, enhancing the positive link between GBMs and IPO success. However, GMC alone had no significant effect. These findings imply that green signals positively contribute to a successful IPO and that each green signal can have different signaling effects, ultimately contributing to the field of sustainability through signaling theory.