Heterogeneous Innovation and IPO Underpricing: Evidence from Patent Quality Dimensions in China’s Registration-Based Market

DOI

10.2991/978-94-6239-787-3_85How to use a DOI?

Keywords

Substantive Innovation; Strategic Innovation; IPO Underpricing; Investor Sentiment; VC/PE Certification

Abstract

Under the comprehensive registration system, how heterogeneous firm-level innovation influences Initial Public Offering (IPO) pricing efficiency has become an important issue. This study uses nonfinancial firms listed on the A-share market from 2019 to 2025 as the sample and classifies patents along three dimensions, including substantive innovation (invention patents), strategic innovation (utility models and designs), and citation frequency. It examines their effects and mechanisms on IPO first-day underpricing. Empirical results indicate that total patent counts, substantive innovation, strategic innovation, and citation frequency each have a significant positive effect on the first-day underpricing rate. The estimated difference in effects between substantive and strategic innovation is not statistically significant. Investor sentiment exerts a significant negative moderating effect on the relationship between total patent counts and underpricing, suggesting that the marginal pricing effect of patent signals is attenuated in high sentiment environments. Venture Capital/Private Equity (VC/PE) backing has a significant negative moderating effect, consistent with a substitution relationship between institutional certification and patent signals. The hypothesized mediating role of conservative pricing by underwriters or issuing institutions is not supported, implying that underpricing is primarily driven by secondary market sentiment rather than by compensation for information asymmetry in the primary market. The findings extend the application of behavioral finance theory in IPO markets and offer policy-relevant implications for disclosure of innovation information and optimization of investor composition under the registration system.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Xingjun Ruan
PY  - 2026
DA  - 2026/09/29
TI  - Heterogeneous Innovation and IPO Underpricing: Evidence from Patent Quality Dimensions in China’s Registration-Based Market
BT  - Proceedings of the 2026 4th International Conference on Management Innovation and Economy Development (MIED 2026)
PB  - Atlantis Press
SP  - 875
EP  - 890
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-787-3_85
DO  - 10.2991/978-94-6239-787-3_85
ID  - Ruan2026
ER  -