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The long‐run role of innovation in the IPO market: inhibition or promotion?

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  • Lu Jolly Zhou
  • Mehdi Sadeghi

Abstract

This study investigates the long‐term role of innovation in the Chinese IPO market. Innovation outcome (patent) has a promoting effect on the long‐term market, while innovation input (R&D) shows a variable inhibitory control, which turns into a favourable impact four years after the IPO due to lag and cumulative effects. Moreover, this inhibitory effect increases and has no positive turnback in firms with R&D myopic management. Furthermore, government subsidies strengthen the effect of innovation during different periods while weakening the positive effect of innovation input four years after the IPO due to firms' rent‐seeking behaviour aiming to obtain government funds.

Suggested Citation

  • Lu Jolly Zhou & Mehdi Sadeghi, 2021. "The long‐run role of innovation in the IPO market: inhibition or promotion?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(2), pages 3735-3779, June.
    • Handle: RePEc:bla:acctfi:v:61:y:2021:i:2:p:3735-3779
    DOI: 10.1111/acfi.12799
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