The Impact of R&D Information Window Dressing on the Long-term Value of Companies and the Role of Underwriters' Reputation: A Case Study of IPO Companies on the Chinese STAR Market
Xuan Zuo, Shaowei Shen
Keywords:
R&D information window dressing, long-term firm value, IPO pricing efficiency, underwriter reputation, STAR Market
Abstract:
The registration-based IPO system on China's Science and Technology Innovation Board (STAR Market) places strong emphasis on firms' R&D capabilities, which may induce some issuers to engage in R&D "window dressing" to improve their apparent competitiveness. This study investigates how R&D window dressing affects the long-term value and post-IPO performance of STAR Market-listed firms from 2019 to 2021, and whether underwriter reputation moderates these effects. Based on information asymmetry, agency theory, and signaling theory, we empirically examine the economic consequences of opportunistic R&D disclosure practices in a high-tech IPO setting. The results show that R&D window dressing significantly undermines firms' long-term value and operating performance, although reputable underwriters can partly mitigate these adverse effects. Firms with severe R&D window dressing exhibit lower shareholder returns and weaker financial performance during the first two years after listing. Using the COVID-19 pandemic as an exogenous shock, we further show that firms with less R&D window dressing display stronger resilience to external market fluctuations, highlighting the importance of substantive rather than symbolic innovation. The findings underscore the need for more transparent R&D disclosure and stronger intermediary oversight under the registration-based framework, and provide meaningful implications for regulators, investors, and underwriters in emerging tech capital markets.
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 The Impact of R&D Information Window Dressing on the Long-term Value of Companies and the Role of Underwriters' Reputation: A Case Study of IPO Companies on the Chinese STAR Market [PDF file] [Filesize: 987.56 KB]
 10.7441/joc.2026.01.06
Zuo, X. and Shen, S. (2026). The Impact of R&D Information "Window Dressing" on the Long-term Value of Companies and the Role of Underwriters' Reputation: A Case Study of IPO Companies on the Chinese STAR Market. Journal of Comptitiveness (18)1, 108-133. https://doi.org/10.7441/joc.2026.01.06
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