Managerial over-optimism and agency costs of debt: Evidence from high-tech IPO firms in Korea

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dc.contributor.authorChoi, Wonseok
dc.contributor.authorChune, Young Chung
dc.contributor.authorKim, Kyung Soon
dc.creatorhttps://orcid.org/0000-0003-3215-8091
dc.date.accessioned2022-11-10T17:02:55Z
dc.date.available2022-11-10T17:02:55Z
dc.date.issued2021-01-15
dc.description.abstractWe examine whether the combination of agency costs of debt and managerial optimism in high-tech IPOs creates inefficient R&D investment, thus undermining corporate value. We find that high-tech IPO firms with a high debt ratio exhibit a positive relationship between discretionary and future R&D expenses at the IPO point. We also find a negative relationship between discretionary R&D expenses and the long-term cumulative abnormal return. Furthermore, managerial optimism and agency costs of debt can increase during an IPO, reducing future value. Thus, a stock return decrease after an IPO may be influenced by management’s psychological errors and shareholders’ preferences for risky investments.en_US
dc.identifier.citationThis is the post-print version of an article that is available at https://doi.org/10.1080/13504851.2021.1875116. Recommended citation: Kim, K. S., Choi, W., & Chung, C. Y. (2021). Managerial over-optimism and agency costs of debt: Evidence from high-tech IPO firms in Korea. Applied Economics Letters, 29(6), 545–550. This item has been deposited in accordance with publisher copyright and licensing terms and with the author’s permission.en_US
dc.identifier.urihttps://hdl.handle.net/11274/14196
dc.identifier.urihttps://doi.org/10.1080/13504851.2021.1875116
dc.language.isoen_USen_US
dc.publisherTaylor & Francisen_US
dc.subjectIPOen_US
dc.subjectHigh-tech firmen_US
dc.subjectDiscretionary R&D expenseen_US
dc.subjectManagerial over-optimismen_US
dc.subjectAgency cost of debten_US
dc.titleManagerial over-optimism and agency costs of debt: Evidence from high-tech IPO firms in Koreaen_US
dc.typePost-Printen_US

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