16.9 Initial Public Offerings
Businesses focus on more growth (e.g., number of users) than traditional financial measures and take longer to go public (double the age before going public as compared to 1980s).
More retail investors due to lo-cost trading platforms.
Longer but still uninformative data. Proposed triggered disclosure
Firms can use their innovation potential as a credible signal of their quality at the time of an initial public offering (IPO).
Innovation potential is positively associated with the initial value of the IPO and with first-day IPO returns, and negatively associated with the extent to which insiders sell their shares at the time of the IPO.
Patents have a stronger impact on insider sales than preannouncements and generic references to future innovation, while preannouncements have the strongest impact on first-day IPO returns.