Enterprises’ R&D investment, venture capital syndication and IPO underpricing

Abstract

Based on the data of companies that got ChiNext listed from 2009 to 2018, this paper em-pirically studies the relationship among R&D investment, venture capital (VC) syndication and IPO underpricing. It is found that there is a significant positive correlation between R&D investment and IPO underpricing, indicating that the higher the R&D investment is, the higher the IPO underpricing degree is; the intervention of VC syndication plays a role of “adverse selection” instead of giving play to its advantages of sharing information, which intensifies the positive correlation between R&D investment and IPO underpricing. Further analysis shows that the reputation of the leading VC in syndication can play a negative regulating role; the higher the reputation of the leading VC is, the more it can play the “certification effect”, reduce the information asymmetry caused by R&D investment, therefore alleviating the IPO underpricing caused by R&D investment.