Does going public in the U.S. facilitate corporate innovation of foreign firms? |
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| Institution: | 1. College of Business, University of Michigan – Dearborn, Dearborn, MI 48126, USA;2. Faculty of Business and IT, Ontario Tech University, Oshawa, ON L1G 0C5, Canada;1. Asper School of Business, University of Manitoba, 181 Freedman Crescent, Winnipeg, MB R3T 5V4, Canada;2. Department of Business, Keyano College, 8115 Franklin Avenue, Fort McMurray, Alberta T9H 2H7, Canada;3. School of Management, New York Institute of Technology, 1700-701 W Georgia St., Vancouver, BC V7Y 1K8, Canada;1. Shenzhen University, Shenzhen International Business School, Shenzhen, China;2. San Francisco State University, College of Business – Department of Finance, 1600 Holloway Drive, San Francisco, CA 94132, United States;3. California State University, Chico, College of Business – Department of Finance and Marketing, 400 W First St, Chico, CA 95929, United States;4. San Francisco State University, College of Business – Department of Finance, 1600 Holloway Drive, San Francisco, CA 94132, United States;1. Key Lab of Intelligent Information Processing of Chinese Academy of Sciences (CAS), Institute of Computing Technology, CAS, Beijing 100190, China;2. School of Computer Science and Technology, Huaqiao University, Xiamen 361021, China;3. University of China Academy Science, Beijing 100190, China;1. Aeronautics and Astronautics Engineering College, Air Force Engineering University, Xi’an 710038, PR China;2. Electronic Information College, Northwestern Polytechnical University, Xi’an 710072, PR China;3. Unit 95844 of People’s Liberation Army, Jiuquan 735305, PR China |
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| Abstract: | We examine how going public in the U.S. IPO market influences corporate innovation. Using 185 foreign and 2948 U.S. domestic firms going public in the U.S. over the 1980–2006 period, we find that while exhibiting similar innovativeness in the pre-IPO period, non-U.S. firms tend to generate more innovation than U.S. domestic firms after going public. The findings are robust to adopting subsample tests, various measures of changes in innovation around the year of the IPO, and accounting for truncation problems and potential endogeneity concerns. Further tests show that changes in innovation around the year of the IPO tend to be less prominent for non-U.S. firms that domiciled in countries with more developed equity market and higher level of economic freedom. Our study provides insights into the real effect of going public in the U.S. IPO market on innovative activities. |
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| Keywords: | Corporate innovation Foreign vs domestic IPOs Financial development Economic freedom |
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