Innovation Value Review and Market Pricing Efficiency:Evidence from the IPO Review Inquiry of STAR Market
The STAR Market's IPO review inquiry process critically evaluates companies'business models,technological innovations,and financial health while deeply scrutinizing their"innovation attributes".This evaluation,however,faces challenges in aligning with the dynamic and incremental nature of"hard technology",potentially leading to adverse selection by technology firms,including manipulative financial reporting to meet innovation criteria.Can the innovation review inquiry process of STAR Market accurately identify and support genuinely innovative enterprises,fostering financial capital's recognition of technological innovation?This paper explores whether STAR Market inquiries effectively identify and support genuinely innovative enterprises,utilizing the Word2Vec method to build a regulatory context-specific dictionary for analyzing innovation value review based on SSE's IPO inquiry letters.Data from July 2019 to June 2023 provide an empirical basis for assessing the impact of these inquiries on the pricing efficiency of STAR Market-listed firms.The study reveals that innovation review inquiry significantly enhances the quality of innovation signals transmitted by IPO enterprises,conveying more granular innovation information at the micro-enterprise level to external markets,and subsequently integrating it into asset pricing.From the perspective of information supply,the innovation review inquiry facilitates supplementation of enterprise innovation information disclosure,effectively expanding the breadth of innovation-related disclosures.Regarding quality improvement,this review mechanism efficiently transmits regulatory pressure,thereby elevating the overall quality of innovation information disclosure.This process markedly improves the pricing efficiency in primary market issuance and the operational efficiency of the secondary market.Mechanism analysis reveals that innovation review inquiry augments the pricing efficiency of the STAR Market through two primary channels:(1)by intensifying the game adequacy among IPO inquiry institutions,and(2)by mitigating investor irrational deviations,thus enabling innovation enterprises to obtain more accurate market valuations.Institutional investors,as professional market participants,exhibit heightened sensitivity to the depth and breadth of innovation review inquiry.They emphasize a comprehensive understanding of the innovation profile of STAR Market listed companies,conducting holistic assessments of their innovation attributes.In contrast,individual investors,constrained by limited professional knowledge and narrow information channels,demonstrate a reduced capacity to process complex information.They tend to gravitate towards simple,clearly"labeled"information while remaining relatively insensitive to data requiring more nuanced interpretation and analysis.Heterogeneity tests indicate that the efficacy of innovation review inquiry in improving pricing efficiency is more pronounced in enterprises with high media pursuit and in low IPO waves.By promoting disclosure of characteristic information from innovation companies,these inquiries effectively filter media noise and corrects over-optimistic market expectations,thereby enhancing pricing efficiency.In addition,the economic consequences test shows that the innovation review inquiry can effectively restrain the R&D manipulation behavior of enterprises through its warning effect,thereby encouraging enterprises to refocus on genuine technological innovation.Based on the findings,this paper proposes the following policy recommendations:Firstly,intensify in-depth examination of innovation value by regulatory bodies,targeting firms with high R&D but low patent output to boost regulatory impact;Secondly,implement a robust regulatory framework for institutional investors'bidding behavior,guiding them to elevate resource allocation efficiency by focusing on review inquiry processes;Thirdly,streamline review inquiry content for clearer comprehension and engagement with innovation information by individual investors,facilitating thorough analysis of technological firms'innovation attributes.
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