Commercialization Strategy and IPO Underpricing
29 Pages Posted: 11 May 2017 Last revised: 18 Jun 2019
Date Written: 2017
This paper studies the interplay between two defining features of technology-based firms: licensing as a commercialization strategy and the reliance on equity financing. Within the context of an IPO, we argue that the technology commercialization strategy of a firm going public affects information asymmetries and, therefore, IPO underpricing. In particular, we theorize that underpricing will be higher when a firm’s technology commercialization strategy is more based on licenses. We also posit that the size of the patent portfolio will mitigate this effect. Our results from a sample of 130 IPOs in the U.S. semiconductor industry confirm these predictions.
Keywords: Initial Public Offering (IPO), Underpricing, License, Patent, Semiconductor
JEL Classification: G32, L24, L63, M13, O32, O34
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