Research On The Economic Consequences Of Whitewashing Innovation Intensity In IPO Firms On The Science And Technology Innovation Board

In November 2018,General Secretary Xi Jinping announced the establishment of the Science and Technology Innovation Board(STAR Market)on the SSE and the pilot registration system,which is a major initiative to implement the innovation-driven and science and technology strengthening strategy by helping high-quality science and technology enterprises to fully connect to the capital market.Unlike IPO companies under the background of an approval system and approval system,the Science and Technology Innovation Board is more inclusive in listing and registering.There is no rigid surplus indicator requirement for IPO companies,and it focuses on the science and technology attributes of the listed companies applying for audit,and the investment in R&D,the percentage of scientific and technological personnel,and patents become the focus of the application audit.Investors also pay attention to the science and technology attributes of the company when they choose to invest in science and technology board companies.Since the opening of the board,it has successfully helped hundreds of science and technology enterprises solve their financing problems.However,while the board is in full swing,problems have gradually emerged.With the increasingly strict and detailed requirements for the audit of science and technology attributes,some companies have been relying on financial statement adjustments to "make up" their R&D investment in order to obtain the listing qualification and increase the issue price.Some enterprises take advantage of the characteristics of R&D activities with strong professionalism and a high degree of information asymmetry to successfully list and obtain higher valuation by unexpectedly increasing innovation intensity indicators such as research capital investment,research personnel as well as the number of patents,etc.This whitewashing behavior not only leads to a decline in the performance of enterprises after listing,but also leads to a return to fundamentals in share price as the information asymmetry eases after listing,which eventually leads to stock breakage and damages the interests of investors.If the regulator fails to effectively identify such whitewashing tactics,it will lead to an indiscriminate number of pseudo-science and technology companies,making the STAR Market full of companies with insufficient scientific and creative attributes,which will not only distort the positioning of the STAR Market,but also bring negative impact on the effective use of resources.Therefore,it is of great practical significance to prevent the whitewashing of innovation intensity in the IPO of the board to protect the interests of investors and the healthy and stable development of the board.Based on information asymmetry theory,signaling theory,surplus management theory,and principal-agent theory,this thesis investigates the ways and motives of whitewashing innovation intensity in the IPO of K and its economic consequences,so as to find that IPO companies on the STAR Market have the behavior of whitewashing innovation intensity before listing,and what impact this behavior has on the stock price of the company after listing.In view of this,this thesis argues that due to the strong information asymmetry of R&D activities,STAR Market firms have sufficient incentive and ability to whitewash innovation intensity in order to be able to successfully list and raise their offering price.Specifically,this thesis takes the case of IPO whitewashing innovation intensity of K as an experimental scenario to analyze the reasons for IPO whitewashing innovation intensity of K,the reasons for successful IPO whitewashing innovation intensity and its resulting economic consequences,so as to reveal the existence of pre-IPO whitewashing innovation intensity of IPO companies on the science and technology innovation board,provide regulators and investors with empirical evidence that can be drawn upon to identify the behavior of IPO companies in whitewashing innovation intensity,and also put forward useful suggestions for regulators to improve the supervision of the science and technology innovation board.This thesis mainly uses the literature research method,case study method and event research method to analyze the behavior of K’s IPO whitewashing innovation intensity and the economic consequences caused by it.This thesis consists of five chapters.The first one is the introduction.The introduction part of this thesis firstly introduces the research background of whitewashing innovation intensity of IPO companies in the STAR Market,then elaborates the research significance of this thesis from both theoretical and practical aspects,then composes and summarizes the relevant domestic and foreign literature,and elaborates the research ideas and research methods of this thesis,and finally refines the writing framework of this thesis.The second chapter is a theoretical overview.This part introduces the characteristics of the IPO issuance system of the STAR Market,outlines the internal and external factors affecting the pricing of STAR Market IPOs,and briefly describes the main methods for STAR Market IPO companies to whitewash innovation intensity,then analyzes the reasons for STAR Market IPO companies to whitewash innovation intensity,and finally elaborates the relevant theoretical basis.The third chapter presents a case study of the intensity of innovation in the IPO whitewash of K.This section focuses on the basic information of K,including the profile of K,the IPO process and the IPO pricing,and analyzes the methods to whitewash the innovation intensity of K’s IPO.Chapter four provides an analysis of the causes and economic consequences of the IPO whitewash innovation intensity of K.This section first analyzes the reasons for K’s IPO whitewashing innovation intensity,and dissects the reasons for K’s successful whitewashing innovation intensity,and finally analyzes the economic consequences of K’s IPO whitewashing innovation intensity from multiple perspectives.Chapter five contains conclusions and insights.This section summarizes the purpose and methods of whitewashing innovation intensity in K’s IPO and the reasons for the related economic consequences,and puts forward specific recommendations from the perspectives of IPO companies,regulators,intermediaries and institutional investors.The main contributions of this thesis are as follows: Firstly,the existing literature mainly focuses on the surplus management behavior of enterprises in whitewashing financial indicators such as profits in order to seek listing,and this study finds that since IPOs on the STAR Market do not have rigid profit requirements,and pay more attention to reviewing the attributes of science and innovation,IPO companies are more inclined to whitewash innovation intensity indicators such as R&D intensity,patents and scientific researchers before listing in order to achieve the purpose of smooth listing and increasing the issuance price,thereby expanding the literature on IPO companies’ eligibility to seek listing and IPO pricing;Secondly,previous research has mainly explored the motivation for whitewashing innovation intensity from the perspectives of obtaining government subsidies,obtaining high-tech enterprise qualifications,and catering to industrial policies to obtain tax incentives.Although some scholars have found that companies whitewash innovation intensity before listing in order to obtain listing qualifications and increase the issuance price,these literature has not been studied in conjunction with the review standards for listing on the Science and Technology Innovation Board,and the existing literature mainly examines the whitewashing innovation intensity of IPO companies and the impact on the company’s stock price after listing by combining theoretical analysis and empirical research.Based on the issuance characteristics of the STAR Board,this thesis analyzes the methods,motives and economic consequences of whitewashing the innovation intensity of K before IPO,and finds that IPO companies on the STAR Market have the behavior of whitewashing the innovation intensity in order to seek listing qualifications,thereby enriching the literature on the motivation of whitewashing innovation intensity and expanding the research on the relationship between IPOs and whitewashing innovation intensity on the STAR Market.