The Impact Of R&D Investment On The IPO Long-term Performance In GEM

Driven by science and technology innovation policies,the importance of enterprises' R&D innovation activities to economic growth and market competitiveness is increasingly prominent.For enterprises that conduct Initial Public Offerings(IPO)on GEM,on the one hand,they are encouraged to actively list by policies,on the other hand,they have to take into account the performance requirements,which may reduce R&D investment,thus affecting the stock performance after listing.At the same time,the long conversion time of R&D activities and the rapid changes in technological innovation have increased the uncertainty of investors' valuations.Most studies have shown that investors' undervaluation of R&D will bring stock excess return.Empirical studies in the IPO market have consistently shown that higher pre-IPO R&D investment pushes up first-day underpricing,but few people pay attention to its impact on the IPO long-term performance.The IPO long-term poor performance is currently one of the anomalies recognized by most researchers,but it is inconclusive for GEM market.The development of behavioral finance theory provides a new perspective for the interpretation of stock market anomalies,heterogeneous belief theory assumes that irrational investors have different expectations on the future returns of assets,which is more in line with real life and has been well applied in explaining IPO anomalies and stock market fluctuations.Based on this,this paper examines the impact of R&D investment on the IPO long-term performance in GEM from the perspective of investors' heterogeneous beliefs.This article selects the IPO enterprises from the establishment of GEM to the end of 2016 as a research sample,and uses the cumulative abnormal return to measure two-year and three-year stocks performance after IPO,and constructs investors' heterogeneous beliefs index through the turnover separation model.Based on the analysis of the IPO long-term performance in GEM,investigate the influence degree and change trend of the pre-IPO R&D investment on the IPO long-term performance,and study the impactmechanism of investors' heterogeneous beliefs in the impact of R&D investment on the IPO long-term performance based on the mediating effect test,further explores the impact of venture capital participation on this mechanism.According to the empirical study,China's GEM IPO enterprises have shown a strong long-term performance within three years after listing.The enterprises with more R&D investment before IPO have better long-term performance,and this positive correlation has a lag.For the R&D investment in the same period,this effect increases with the window period of the IPO long-term performance,indicating that the realization of R&D activities is slow.The mediating effect test shows that investors' heterogeneous beliefs play a part of the mediating effect in the impact of R&D investment on the IPO long-term performance.The specific influence path is the uncertain characteristics of R&D activities and the limited attention of investors,which mitigates investors' heterogeneous beliefs,makes the investors underreact to R&D at the initial stage of IPO,with the return of value to the higher IPO long-term performance.Regression based on whether there is venture capital participation of IPO once again verified R&D investment promoted the IPO long-term performance,but only when there is venture capital support,the mediating effect of investors' heterogeneous beliefs is significant,indicating the market power of venture capital make IPO enterprises less vulnerable to investor sentiment.In general,this paper examines the impact of pre-IPO R&D decisions on the IPO long-term performance based on the sample of China's GEM enterprises.The purpose is to help identify investors' heterogeneous beliefs when they pay attention to R&D activities and new shares based on the analysis of investors' heterogeneous beliefs,and at the same time provide certain reference for issuers and regulators to make decisions.