The Effect Of R&D On The IPO Underpricing Under The Venture Capital’s Participation

Abstract:With the rapid development of science and technology in the knowledge economy times, R&D investment plays an increasing role in the development enterprise, In order to maintain long-term competitiveness, enterprise have to increase R&D investment. high investment formed the basis of technological innovation, and venture capital made it come true. R&D investment reflects value to some extend. Because of the particular characteristics of R&D activities, the unsymmetrical state of information between manages of an enterprise and investors from outside is aggravated. The Information Asymmetry lead to IPO underpricing. For venture capital, its purpose is to exit smoothly when the enterprise value added, so as to achieve high return. IPO is the most important way of exiting. In the GEM market with high proportion of high-tech enterprises, IPO underpricing serious. Therefore, under the existing IPO issuance system, this paper focus on a particular form of this asymmetry-the relation between R&D investment level and underpricing of IPOs, and explore the regulating effect of venture capital to this relationship. In order to the put forward the corresponding countermeasure for IPO underpricing and make the company’s IPO price reflect the value of the company accurately.After reading and learning the domestic and foreign literature and the related theory, the paper proposed a viewpoint that R&D investment can induce IPO underpricing, while venture capital have effects of adjustment to the relationship. The paper take GEM listed companies as research objects and use multiple regression method, hierarchical regression model makes the empirical analysis.The empirical results show that R&D investment has significantly positive influence on the IPO underpricing. Venture capital’ participating in or not have significantly positive regulatory effect on IPO underpricing.Venture capital shareholding ratio, venture capital reputations both have significantly negative regulatory effect on IPO underpricing. Venture capital’ participating in or not has no significantly influence on the IPO underpricing, Venture capital shareholding ratio, venture capital reputations both have significantly negative influence on the IPO underpricing.