Green transition and market dynamics: the transformative power of sustainable newcomers

This thesis investigates the strategic and reputational impact of sustainability-oriented Initial Public Offerings (green IPOs) on the Environmental, Social, and Governance (ESG) performance of incumbent firms. While the existing literature recognizes the increasing importance of ESG practices, a knowledge gap remains regarding whether the entry of green firms generates meaningful peer effects or merely signals compliance. By explicitly framing the green IPO as a time-stamped reputational shock, this study is positioned at the intersection of corporate finance, strategic management, and sustainability research, clarifying both the what, the measurable ESG response of incumbents, and the why, the competitive and informational mechanisms underlying this response. To address this question, a panel of U.S.-listed firms from 2010 to 2024 is constructed and matched to 2,063 IPO events. ESG outcomes are measured primarily through Truvalue Labs and complemented with Refinitiv data, while financial controls are drawn from FactSet. Methodologically, the study adopts a two-step System GMMestimator within a dynamic panel framework, accounting for persistent ESG behavior, endogeneity, and unobserved heterogeneity. This design allows for the identification of causal effects while simultaneously capturing heterogeneity across incumbents’ initial ESG positions. The results reveal that green IPOs significantly elevate the ESG performance of industry peers, with the strongest effects observed among initially low-performing, so-called brown firms. Robustness checks across alternative ESG metrics, lag structures, and sample specifications confirm the consistency of these findings. The thesis thus demonstrates that sustainable newcomers can act as catalysts for broader industry-wide ESG adoption, not merely through signaling, but through tangible peer-driven strategic adjustments. Beyond the empirical evidence, this study contributes meta-communicatively to the literature by articulating a structured workflow, from theoretical framing to data integration and causal inference, which other researchers can replicate in ESG peer-effect studies. The findings have implications for policymakers, investors, and corporate strategists, suggesting that the design of green market instruments can strategically leverage competitive and reputational mechanisms to accelerate the diffusion of sustainability practices