Explaining The Short-And Long-Term IPO Anomalies By R&D
- Topics:
- IPO
- Tags:
- Business Operations,
- Finance,
- Financial Services,
- Investment,
- IPO,
- R&D,
- Research & Development
- Source:
- New York University
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Overview: Financial scholars who research the initial underpricing and long-term underperformance of IPOs (Initial Public Offering) generally attribute these phenomena to information asymmetry and investors' misevaluations. Here, the authors identified 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 (Research & Development) activities in modern economies, the identification of R&D as a major factor affecting IPO's performance contributes to the understanding of this important economic and capital market phenomenon.
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Format: PDF | Size: 241KB | Date: Aug 2004 | Pages: 39
