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R&D intensity and the performance of IPOs

Author

Listed:
  • Roger C.Y. Chen
  • Chao-Shi Wang
  • Ru-Ping Shi

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.

Suggested Citation

  • Roger C.Y. Chen & Chao-Shi Wang & Ru-Ping Shi, 2008. "R&D intensity and the performance of IPOs," International Journal of Innovation and Learning, Inderscience Enterprises Ltd, vol. 5(3), pages 241-254.
    • Handle: RePEc:ids:ijilea:v:5:y:2008:i:3:p:241-254
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