Trademarks as Value Investment: Evidence from US IPOs

52 Pages Posted: 26 Mar 2020 Last revised: 11 Jun 2021

See all articles by Kyriakos Drivas

Kyriakos Drivas

University of Piraeus

Dimitrios Gounopoulos

University of Bath

Dimitris Konstantios

University of Piraeus

Emmanuel D. Tsiritakis

University of Piraeus

Date Written: December 13, 2017

Abstract

We examine the impact of trademarks (TMs) on the initial public offering (IPO) valuation process of firms, their future performance, and capital market resilience. We find that TMs play an ambivalent role in under-pricing, depending on their quality. The existence of TMs tends to increase under-pricing, while a high-quality trademark portfolio has the opposite effect. For firms in the service sector, where intangible assets dominate, TMs exhibit a greater influence on under-pricing. Results are robust to a battery of tests, including propensity score matching and instrumental variable analysis. After the IPO, we find that firms with TM activity prior to their listing on average perform better than expected as evidenced by i) their abnormal returns following the IPO and ii) a lower hazard of being de-listed from organized exchanges. Our results call for increased disclosure of TM activity by firms to reduce under-pricing and therefore 'money left on the table’.

Keywords: Trademark Valuation, IPO Underpricing, Post-IPO Performance, USPTO, Information Asymmetry, Industry Analysis

JEL Classification: G14, G39, O30, O34

Suggested Citation

Drivas, Kyriakos and Gounopoulos, Dimitrios and Konstantios, Dimitris and Tsiritakis, Emmanuel D., Trademarks as Value Investment: Evidence from US IPOs (December 13, 2017). Available at SSRN: https://ssrn.com/abstract=3535967 or http://dx.doi.org/10.2139/ssrn.3535967

Kyriakos Drivas

University of Piraeus ( email )

Karaoli and Dimitriou 80
80 KARAOLI & DIMITRIOU STREET
Piraeus, Attiki 18534
Greece

Dimitrios Gounopoulos (Contact Author)

University of Bath ( email )

School of Management,
Wessex House, Claverton Down
Bath, BA2 7AY
United Kingdom

Dimitris Konstantios

University of Piraeus ( email )

Karaoli and Dimitriou 80
80 KARAOLI & DIMITRIOU STREET
Piraeus, Attiki 18534
Greece

Emmanuel D. Tsiritakis

University of Piraeus ( email )

80 Karaoli & Dimitriou Str.
18534 Piraeus, 185 34 -GR
Greece
00302104142187 (Phone)

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