The long-run role of innovation in the IPO market: inhibition or promotion?

Lu Jolly Zhou*, Mehdi Sadeghi

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)

Abstract

This study investigates the long-term role of innovation in the Chinese IPO market. Innovation outcome (patent) has a promoting effect on the long-term market, while innovation input (R&D) shows a variable inhibitory control, which turns into a favourable impact four years after the IPO due to lag and cumulative effects. Moreover, this inhibitory effect increases and has no positive turnback in firms with R&D myopic management. Furthermore, government subsidies strengthen the effect of innovation during different periods while weakening the positive effect of innovation input four years after the IPO due to firms' rent-seeking behaviour aiming to obtain government funds.

Original languageEnglish
Pages (from-to)3735-3779
Number of pages45
JournalAccounting & Finance
Volume61
Issue number2
Early online date30 Apr 2021
DOIs
Publication statusPublished - Jun 2021

Keywords

  • government subsidies
  • innovation
  • IPO
  • long-term performance
  • myopic management

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