EXPRESS: Climate Communications in IPOs: Unpacking the Influence of Climate Disclosure Volume, Sender, and Message Characteristics
Ankit Anand et al.
What the paper says
Climate disclosures have emerged as a prominent communication tool for firms facing growing pressure to address climate challenges, yet their impact on firm performance remains unclear. This study proposes a nonlinear (U-shaped) relationship between climate disclosure volume and IPO firm performance, grounded in a damage-limitation logic. At low to moderate levels, disclosures amplify risk salience and proprietary costs, damaging valuations. At higher levels, offsetting benefits related to information, stewardship, and climate-friendly reputation outweigh these costs. Using multi-sourced data from 1,586 IPO firms, a BERT-based large language model to identify climate-related text in prospectuses, and econometric methods that address endogeneity, the authors find support for the proposed U-shaped relationship. The research further demonstrates that sender characteristics (underwriter reputation, customer concentration, and market orientation) and message characteristics (discretionary disclosure and message clarity) moderate the nonlinear relationship. Post-hoc analyses decomposing disclosure content reveal that climate risk disclosures damage valuations. In contrast, climate risk-management disclosures (governance, strategy, and metrics/targets) generate positive effects, suggesting that disclosure effectiveness depends on both volume and content composition. These effects persist in the long-term performance of firms. The findings provide actionable insights for firms developing disclosure strategies and policymakers encouraging climate-related communication.
Evidence weight
Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40
| F · citation impact | 0.50 × 0.4 = 0.20 |
| M · momentum | 0.50 × 0.15 = 0.07 |
| V · venue signal | 0.50 × 0.05 = 0.03 |
| R · text relevance † | 0.50 × 0.4 = 0.20 |
† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.