Abstract

This study investigates investors’ perception of the technology evaluation of Biotechnology Special Listing by examining the value relevance of R&D expenditures. Technology Special Listing, introduced to support the KOSDAQ listing of innovative ventures with low profitability but high growth potential, has benefits such as relaxed standards of management performance when listed, no designation as administrative issues related to sales and earnings before tax for several years after listing. It is necessary to objectively and professionally evaluate technology so that firms with little growth potential do not go public, requiring to acquire A and BBB grades or higher from two professional rating agencies designated by Korea Exchange in Korea. If investors do not trust the technology evaluation, not reflecting it in the stock price, technology special listings will have difficulty in raising funds. Therefore, the investors’ reliability on the technology evaluation needs to be examined, and this paper uses the value relevance of R&D expenditures for technology special listings and seeks to provide a basis for system improvement. As a result of analyzing KOSDAQ listed companies in the same industry as biotechnology special listing firms from 2015 to 2020, the value relevance of capitalized R&D expenditures for technology special listings is incrementally higher than for general listings. However, considering the period after listing, the results showed that 1 to 5 years after listing are not higher, and significant results are confirmed beyond 5 years. Even when target years are from 2017 to 2020 under the influence of Financial Supervisory Services’s development cost theme supervision, and sample consists of loss companies, the results are maintained. This indicates that investors have limited trust about the technology evaluation of technology special listings and it provides the basis for the supervisory authorities’ currently in progress plan ‘Technology Special Listing System Improvement Measures’. At the same time, this study demonstrates and emphasizes that technology evaluation is important for establishment and revitalization of the system.

Keywords

• Biotechnology Special Listing
• Research and Development
• Value Relevance11)

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