Freshen up before going public: Do environmental, social, and governance factors affect firms' appearance during the initial public offering?

Going public (or initial offering IPO) is a corporate strategic decision for value enhancement. Underpricing phenomenon related to going and has been studied from purely financial perspective. In this paper, we investigate whether underpricing incorporates sustainability performance pre-IPO by establishing an original linkage between ESG factors before the firm's listing on stock markets. Using informational asymmetries quality signaling frameworks, track journey of Italian Small Medium Enterprises (SMEs) 2009 2017 show how issues are incorporated into IPO underpricing. We demonstrate that strongly variables only in year just IPO, indicating better efficiency, signaling, image-improving practice. The post-IPO return less correlated with variables, suggesting markets can incorporate such information returns long run. This paper provides novel insights delivering attributes performance, temporal tracking SMEs after emphasizing role process.