Title: Market information feedback for the high-tech dominated IPO companies

Authors: Kuang-Hsun Shih, Ching-Wen Lin, Huang-Ta Huang, Wen-Chyuan Chiang

Addresses: School of Business, Chinese Culture University, Yang-Ming Mountain, 11192 Taipei, Taiwan. ' School of Business, Chinese Culture University, Yang-Ming Mountain, 11192 Taipei, Taiwan. ' Department of Performance Research, Association of Management Performance Measurement, Yang-Ming Mountain, 11192 Taipei, Taiwan. ' College of Business Administration, University of Tulsa, Tulsa, OK 74104, USA

Abstract: The prevalence of investment opportunities and the cost of capital are the two uncertainties that affect the managers| selection and judgment of future investment opportunities. This study investigates the effect of an IPO company|s initial return on the investment policies of managers by examining the causal relationships among variables including pre- and post-IPO capital expenditure levels, forecasted growth rates, company size and initial returns. The findings show Market Feedback Hypothesis, which applies to Taiwan|s market, but also managers take advantage of their control of pre-IPO investment and dividend policies to influence the judgment of investors at the time of the initial public offering in order to affect the initial return rate. In addition, company size has an inverse relationship to the stability of both pre- and post-IPO investment policies: smaller companies| managers tend to refer to investors| expectations when adjusting their future investment policies.

Keywords: capital expenditures; growth expectation; initial ROI; return on investment; investment decisions; IPO; market feedback hypothesis; investment opportunities; initial public offerings; Taiwan; company size; investment policies.

DOI: 10.1504/IJTM.2008.019408

International Journal of Technology Management, 2008 Vol.43 No.1/2/3, pp.76 - 95

Published online: 11 Jul 2008 *

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