R&D and innovation are critical factors to succeed. Nevertheless, they generate information asymmetries between corporate insiders and external investors. Within the context of an IPO, information asymmetries increase the risk of underpricing. In this paper, we claim that the patent commercialization strategy of the firm going public affects information asymmetries and IPO underpricing. In particular, underpricing will be higher when a firm’s patent commercialization strategy is more based on licenses. A firm’s stock of patent attenuates this effect. Our results on a sample of 130 IPOs in the US semiconductor industry confirm these predictions.
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