Skip to main content

The Impact of Innovation on IPO Underpricing in the STAR Market

  • Conference paper
  • First Online:
Recent Advancements in Computational Finance and Business Analytics (CFBA 2023)

Part of the book series: Learning and Analytics in Intelligent Systems ((LAIS,volume 32))

  • 205 Accesses

Abstract

IPO underpricing refers to the phenomenon of excess returns at the beginning of an IPO. This paper selects 505 companies listed on the STAR Market from 2019 to 2022 as samples, and examines the impact of technological innovation on IPO underpricing from the perspectives of R&D investment and R&D output. The results show that R&D investment, which is characterized by information asymmetry, leads to uncertainty in the market's valuation of companies, which will intensify IPO underpricing, but the signal effect of patents will significantly reduce the degree of IPO underpricing. The study suggests that companies should pay more attention to patent applications while increasing R&D investment, and focus on converting the results of R&D investment into patents in order to obtain more commercial value.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 169.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
USD 219.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Similar content being viewed by others

References

  1. X. Gabaix, R.S.J. Koijen, In search of the origins of financial fluctuations: the inelastic markets hypothesis. National Bureau of Economic Research (2021)

    Google Scholar 

  2. F. Jamaani, M. Alidarous, Review of theoretical explanations of IPO underpricing. J. Account. Bus. Financ. Res. 6(1), 1–18 (2019)

    Article  Google Scholar 

  3. K. Rock, Why new issues are underpriced[J]. J. Financ. Econ. 15(1–2), 187–212 (1986)

    Article  Google Scholar 

  4. L. Fergusson, P. Querubin, N.A. Ruiz et al., The real winner’s curse. Am. J. Polit. Sci. 65(1), 52–68 (2021)

    Article  Google Scholar 

  5. M. Grinblatt, S. Titman, Mutual fund performance: an analysis of quarterly portfolio holdings. J. Bus., 393–416 (1989)

    Google Scholar 

  6. O.A. Obrimah, A new test of the signaling theory of IPO underpricing (2019). Available at SSRN 2896777

    Google Scholar 

  7. T. Loughran, J. Ritter, Why has IPO underpricing changed over time? Financ. Manag., 5–37 (2004)

    Google Scholar 

  8. Y. Ma, G. Liu, C. Qi, IPO pricing, investor behavior, and IPO underpricing of high-tech companies: evidence from SSE STAR market and Nasdaq market. Discret. Dyn. Nat. Soc., 2022 (2022)

    Google Scholar 

  9. D. Aboody, B. Lev, Information asymmetry, R&D, and insider gains. J. Financ. 55(6), 2747–2766 (2000)

    Article  Google Scholar 

  10. D. Salerno, G. Sampagnaro, V. Verdoliva, Fintech and IPO underpricing: an explorative study. Financ. Res. Lett. 44, 102071 (2022)

    Article  Google Scholar 

  11. K.J. Merkley, Narrative disclosure and earnings performance: evidence from R&D disclosures. Account. Rev. 89(2), 725–757 (2014)

    Article  Google Scholar 

  12. S. Morricone, F. Munari, R. Oriani et al., Commercialization strategy and IPO underpricing. Res. Policy 46(6), 1133–1141 (2017)

    Article  Google Scholar 

  13. J.M. Rahman, M. Yang, Effects of venture capital, R&D, and technology on IPO Underpricing: evidence from China. Cap. Mark. Rev. (2021)

    Google Scholar 

  14. L.J. Zhou, M. Sadeghi, The impact of innovation on IPO short-term performance–evidence from the Chinese markets. Pac. Basin Financ. J. 53, 208–235 (2019)

    Article  Google Scholar 

  15. T. Loughran, B. McDonald, IPO first-day returns, offer price revisions, volatility, and form S-1 language. J. Financ. Econ. 109(2), 307–326 (2013)

    Article  Google Scholar 

  16. H. Guo, Y. Wang, B. Wang et al., Does prospectus AE affect IPO underpricing? A content analysis of the Chinese stock market. Int. Rev. Econ. Financ. 82, 1–12 (2022)

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Shuijing Hu .

Editor information

Editors and Affiliations

Rights and permissions

Reprints and permissions

Copyright information

© 2023 The Author(s), under exclusive license to Springer Nature Switzerland AG

About this paper

Check for updates. Verify currency and authenticity via CrossMark

Cite this paper

Hu, S. (2023). The Impact of Innovation on IPO Underpricing in the STAR Market. In: Gupta, R., Bartolucci, F., Katsikis, V.N., Patnaik, S. (eds) Recent Advancements in Computational Finance and Business Analytics. CFBA 2023. Learning and Analytics in Intelligent Systems, vol 32. Springer, Cham. https://doi.org/10.1007/978-3-031-38074-7_11

Download citation

Publish with us

Policies and ethics