IPO success of high-technology companies

Abstract

PURPOSE: The research aimed to verify whether high-technology companies are more successful during IPO than other low-technology peers.

DESIGN/METHODOLOGY/APPROACH: We evaluated the IPO success using two measures: 1) relation of capital collected during IPO to the equity capital at the year-end of IPO, 2) underpricing. The analysis was based on the IPO of 334 companies on the Warsaw Stock Exchange in Poland from 2004 to 2018. According to Eurostat methodology, we measured technology level, and we divided companies into two groups, HT (high-tech) and LT (lowtech). Models were executed separately for the whole sample but also for each group. As control variables we have used, debt, profitability, size, and the bull market indicator.

FINDINGS: Our empirical results confirmed that the more technologically advanced company (in terms of the sector in which the company operates), the lover success of IPO. The HT companies collect a relatively smaller amount of capital during IPO, and the underpricing is higher in the HT group. We link the results with a higher asymmetry of information.

PRACTICAL IMPLICATIONS: HT companies should pay special attention to lower the information asymmetry before the IPO by disclosing precise information about future development for betted risk evaluation. HT should also raise a small amount of capital during the IPO and make secondary issues later when the company is more recognized in the market.

ORIGINALITY/VALUE: The previous research mainly focused on how going public impacts the innovation activities post-IPO. We did not find the previous literature studies on the IPO success of HT and LT firms. Some were related to underpricing, however, we extended measuring IPO success to additional indicator.