The effect of R&D on IPO pricing

This thesis investigates the impact of Research and Development (R&D) intensity on the pricing of Initial Public Offerings (IPOs) across various industries, challenging the traditional view that higher R&D intensity directly correlates with increased IPO pricing. The study employs a quantitative approach, analysing financial data from companies going public between 2016 and 2022, excluding years affected by COVID-19. The findings reveal a more complex relationship than previously assumed. Contrary to expectations, the research indicates either a negligible or even inverse relationship between R&D intensity and IPO pricing. This study also explores the role of patents, finding a potential positive impact, but without a statistically significant correlation with IPO pricing. Additionally, the research shows no significant interaction effects of the high-tech industry context on the valuation of R&D intensity and patents, suggesting that the high-tech industry does not differentially value R&D intensity compared to other sectors. These insights contribute to a nuanced understanding of the role of R&D in IPOs and challenge prevailing assumptions in the field. For finance practitioners and IPO strategists, the findings offer essential insights for optimizing IPO preparation and strategy.