Governing Sustainability After <scp>IPO</scp> : Corporate Governance Mechanisms and <scp>ESG</scp> Pillar Trajectories in the Euro Area

ABSTRACT This study provides exploratory evidence on whether going public may act as a catalyst for corporate sustainability and examines whether board‐level governance arrangements shape post‐IPO sustainability trajectories. Drawing on a formal conceptual framework that integrates agency theory, legitimacy theory, and the resource‐based view as distinct mechanisms generating pillar‐specific predictions, we analyze a panel of 495 Euro Area IPO firms over up to 9 years following listing. We estimate within‐firm specifications with year fixed effects and complement them with event‐time analyses to document systematic post‐IPO ESG dynamics. We then examine whether governance characteristics, such as the presence of the CSR Committee, board independence, and board gender diversity, are associated with stronger post‐IPO sustainability profiles, consistent with the view that governance structures help translate public‐market scrutiny into organizational change. The results document heterogeneous dynamics across the three ESG pillars. Governance scores improve rapidly in the early post‐listing years and stabilize sooner, consistent with the structural adjustments predicted by agency theory, while environmental and social performance accumulates more gradually and persistently, in line with legitimacy‐driven stakeholder pressure and resource‐based capability building. Governance mechanisms operate through pillar‐specific channels: CSR Committees are positively associated with environmental and social outcomes but not with governance scores, while board independence and gender diversity are most strongly related to governance improvements. The evidence offers descriptive and mechanism‐oriented insights that motivate future causal tests of listing as a sustainability trigger.