The ESG Effect on IPO Underpricing: A study using textual analysis to explore the effect of ESC disclosure on IPOs first-day returns on Oslo Stock Exchange and Euronext Growth
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- Master Thesis 
This thesis examines the relationship between ESC disclosure and underpricing of IPOs on Oslo Stock Exchange and Euronext Growth. By employing textual analysis methods and an ESC dictionary, we construct a measure of ESC disclosure in IPO prospectuses for all companies. Thus, solving issues with sample selection biases due to lacking coverage from commercial rating agencies. We analyse a sample of 145 IPOs from January 2015 until December 2021 and find that a one standard deviation increase in our measure of Environmental disclosure leads to a 1.44% increase in first-day returns. The results suggest that Environmental disclosure increases investors' appetite for a stock in its initial offering and that Social, Governance and ESC disclosure in total does not significantly affect a stock's initial return. Hence, companies with relatively more Environmental disclosure tend to yield better first-day trading results.