Trademark and IPO Underpricing
Posted: 19 Oct 2019
Date Written: August 1, 2019
This paper studies the relationship between a firm’s pre-IPO trademarks and its IPO under-pricing. Using 4,321 US IPOs during the period 1980-2016, we find that firms with a larger number of trademarks prior to the IPO date experience significantly less IPO under-pricing. We employ the 1996 Federal Trademark Dilution Act as a quasi-natural experiment and an instrumental variable approach to establish the causality. Our findings are in line with that trademarks reduce IPO under-pricing through signaling firm quality.
Keywords: Trademark; IPOs Underpricing, Information Asymmetry, Signaling
JEL Classification: G14, G24, O30, O34
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