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The effects of R&D, venture capital, and technology on the underpricing of IPOs in Taiwan |
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| Authors: | Cheng Shou Lu Lanfeng Kao Anlin Chen |
| Affiliation: | 1. Graduate Institute of Finance, Economics, and Business Decision, National Kaohsiung University of Applied Sciences, Kaohsiung, Taiwan 2. Department of Finance, National University of Kaohsiung, Kaohsiung, Taiwan 3. Department of Business Management, National Sun Yat-Sen University, Kaohsiung, Taiwan |
| 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. |
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