Explaining the long-term performance of IPOs with R&D efficiency - the data envelopment analysis approach

This research employs data envelopment analysis (DEA) to evaluate R&D efficiency of electronic initial public offerings firms (IPOs) and investigates the relation between R&D efficiency and the long-term performance of those companies. Our empirical result shows that the absence of pure technical efficiency accounts for 61.05% of deficient resource utilization, while the shortage of scale efficiency results in 38.95% of it. Consequently, a higher portion of resource wasting comes from managers' inefficient operation. We also learn that long-term performance of IPOs can be explained by scale efficiency in a regression model. Long-term returns on IPOs can be improved if companies can achieve optimal production scale.