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The effects of R&D, venture capital, and technology on the underpricing of IPOs in Taiwan

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  • Cheng Lu

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  • Lanfeng Kao
  • Anlin Chen
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    Abstract

    Information asymmetry and value uncertainty causes high -research and development (R&D) or high-tech Initial Public Offerings (IPOs) to become underpriced. Venture capital can serve as a moderator to mitigate the information asymmetry and value uncertainty to reduce IPO underpricing. High-tech industries significantly contribute to Taiwan’s economic growth. With the unique Taiwan data, we find that venture-backed IPOs are less underpriced. More importantly, IPO underpricing due to technology decreases with the use of venture capital and decreases with the interaction between R&D expenditure and technology. Technology requirement reduces the underpricing of high-R&D IPOs. Accordingly, R&D spending reduces the underpricing of high-tech IPOs. Copyright Springer Science+Business Media, LLC 2012

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    Bibliographic Info

    Article provided by Springer in its journal Review of Quantitative Finance and Accounting.

    Volume (Year): 39 (2012)
    Issue (Month): 4 (November)
    Pages: 423-445

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    Handle: RePEc:kap:rqfnac:v:39:y:2012:i:4:p:423-445

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    Web page: http://springerlink.metapress.com/link.asp?id=102990

    Related research

    Keywords: High-tech firms; Initial public offerings; R&D expenditure; Technology; Venture capital; G24;

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