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The long‐run role of innovation in the IPO market: inhibition or promotion?
Author(s) -
Zhou Lu Jolly,
Sadeghi Mehdi
Publication year - 2021
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12799
Subject(s) - initial public offering , subsidy , government (linguistics) , business , promotion (chess) , monetary economics , control (management) , economics , market economy , finance , management , linguistics , philosophy , politics , political science , law
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.