Title: R&D intensity and the performance of IPOs

Authors: Roger C.Y. Chen, Chao-Shi Wang, Ru-Ping Shi

Addresses: Graduate Institute of Business Management, National Kaohsiung First University of Science and Technology, 2, Juoyue Road, Nantz District, Kaohsiung 811, Taiwan, ROC. ' Department of Finance and Risk Management, Shu-Te University, 59, Hun Shan Road, Hun Shan Village, Yen Chau District, Kaohsiung 824, Taiwan, ROC. ' Graduate Institute of Business Management, National Kaohsiung First University of Science and Technology, 2, Juoyue Road, Nantz District, Kaohsiung 811, Taiwan, ROC

Abstract: The importance of innovation resides in the nexus of competitive ability. This article investigates the relationship between Research and Development (R&D) intensity and the performance of Initial Public Offerings (IPOs) in Taiwan. Our empirical results show that most companies have lowered R&D intensity before IPO, whereas they slightly increase R&D intensity after issuance. That implies that earnings manipulation before going public may exist. An additional finding is that, those companies which have gradually increased their R&D intensity prior to IPO perform not only better than the market portfolio in the long run, but also superior to those which spent less in R&D before IPO.

Keywords: performance; research and development; R&D intensity; innovation; initial public offerings; IPOs; Taiwan.

DOI: 10.1504/IJIL.2008.017360

International Journal of Innovation and Learning, 2008 Vol.5 No.3, pp.241 - 254

Published online: 02 Mar 2008 *

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