R&D Investment on Anomalies of Initial Public Offering Firms
Jin-Woo Kim
Jong-Ryong Lee
This paper examines that the amount of R&D investment of newly listed firms just before listing years as a proxy of informational asymmetry affect the anomalies of initial public offering (IPO) in Korea. 733 samples from 2000 to 2008 among about 1800 firms listed in Korea are selected as samples. Analyses of the samples present that firms with more amount of R&D investment offer lower prices for their IPOs and then result in higher underpricing as measured with first aftermarket date closing prices over offer prices. Moreover the paper shows that the IPOs of less invested R&D firms just before listing years are more under-performed in long run. These results imply that informational asymmetry between issuing firms and market investors affects long-run as well as short-run IPO anomalies.
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