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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/27474
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| Title: | Explaining the Short- and Long-Term IPO Anomalies in the US by R&D |
| Authors: | Guo, Re-Jin
Lev, Baruch
Shi, Charles |
| Keywords: | R&D
IPO's performance
information asymmetry
investor optimism |
| Issue Date: | Aug-2005 |
| Series/Report no.: | Baruch Lev-14 |
| Abstract: | Financial scholars who research the initial underpricing and long-term
underperformance of IPOs generally attribute these phenomena to
information asymmetry and investors' misevaluations. Here, we identify,
on a sample of 2,696 US IPOs issued during 1980-1995, a widespread
source of information asymmetry and valuation uncertainty - the R&D
activities of issuers - and document that these activities significantly
affect both the initial underpricing of IPOs (R&D is positively
correlated with underpricing) and their long-term performance (R&D
is positively related to long-term performance). Given the pervasiveness
and constant growth of firms' R&D activities in modern economies,
our identification of R&D as a major factor affecting IPO's
performance contributes to the understanding of this important economic
and capital market phenomenon. |
| URI: | http://hdl.handle.net/2451/27474 |
| Appears in Collections: | Accounting Working Papers
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