Trademark and IPO Underpricing

Forthcoming in Financial Management

60 Pages Posted: 19 Oct 2019 Last revised: 25 Jun 2021

See all articles by Bin Yang

Bin Yang

Jinan University - Management School

Tao Yuan

Nanjing University - School of Business

Date Written: August 1, 2019


While trademarks are mentioned in many firms’ IPO prospectuses, their influences on the IPO valuation process are underexplored. This paper studies the relationship between a firm’s pre-IPO trademarks and its IPO underpricing. Using 4,457 US IPOs during the period 1980-2018 we find that firms with a larger number of trademarks prior to the IPO date experience significantly less IPO underpricing. We employ a quasi-natural experiment brought about by the 1996 Federal Trademark Dilution Act and an instrumental variable approach to establish causality. Our findings suggest that trademarks help reduce information asymmetry among various IPO participants, leading to less underpriced IPOs.

Keywords: trademark; IPO underpricing; information asymmetry; product development

JEL Classification: G12, G24, G30, O34

Suggested Citation

Yang, Bin and Yuan, Tao, Trademark and IPO Underpricing (August 1, 2019). Forthcoming in Financial Management, Available at SSRN:

Bin Yang

Jinan University - Management School ( email )

No. 601, West Huangpu Road
Guangzhou, Guangdong 510632

Tao Yuan (Contact Author)

Nanjing University - School of Business ( email )

22 Hankou Road
Nanjing, Jiangsu 210093 210093

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