IPO And Innovation Strategies:Affected By Stock Price Informativeness

The price changes of financial market convey information as a basis for investment and financing activities to achieve information transmission and resource allocation from the financial market to the real economy.The IPO and the innovation are one of the important decision-making of the financial market and the enterprise investment and financing activities respectively,IPO is of importance to hence the innovation capability of enterprises,at the same time,the information disclosure system places enterprise innovation activities in a more transparent environment,overlay technology innovation risk and stock price information disclosure factors,so that enterprises and even linkage the entire industry innovation benefits down.Therefore,this article from the stock price informativeness perspective,which is the concrete manifestation of the real economic change in the financial market,explore the relationship between IPO and enterprise innovation strategy,which has a certain practical significance to establish the link between financial market and the real economy.Based on the analysis of stock price information disclosure and innovation strategy established by Ding(2015),this paper establishes the game model of IPO and innovation,extends the model timeline to the unlisted or IPO stage,and combines the stock price informativeness,explore the specific impact mechanism of IPO on enterprise innovation strategy.Firstly,the model shows the higher the probability of innovation,the higher the marginal cost;the greater the competitive advantage of the product market,the greater the value of the option;the higher the probability of innovation investment is.Secondly,the higher the profitability of innovation;the market size is limited and the competition environment is more moderate,the higher the probability of information disclosure is conducive to industry competition.Finally,after the IPO,the investment in innovation is increasing,but generally the profitability is declining,the investment profit of the industry is declining simultaneously,the declining of investment income is negatively correlated with the product market competition.Our data sample include 2,323 listed companies' relevant financial and market transactions data from 2005 to 2015 of IPO firms in year 1990 to 1st 2012 based on the classification of industry,including the stock price informativeness,product market competition,scale and profitability and other indicators.This paper focuses on the relationship between stock price information and innovation,and further analyzes the impact of IPO on the change of enterprise innovation strategy under the product market competition.The results of the hypothesis are as follows:First,the stock price information has a positive impact on the investment of innovation.In the industry where the competition is more intense or the scale and profitability are large,the sensitivity is stronger;Second,IPO will thicken the content of information content,corporate innovation investment increased,but the overall profitability rate of innovation and industry showed a downward trend;Third,short-term after the IPO,corporate profitability decreased more obvious,in the long run,the IPO is stable and the development is in condition,that is,the IPO creates a better living environment for the whole industry and can improve the enterprise's survival rate.