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In this paper, the authors will analyze the effect of IPOs on R&D investment and argue a change in the role of VC in the pre- and post-IPO periods for Japanese firms. It can be stated that the shareholding by VC mitigates the financial constraints of firms and is positively correlated with their R&D investment in the pre-IPO period; however, this effect disappears in the post-IPO period. In addition, it can be assumed that financial constraints are released and informational asymmetries are reduced by IPOs. Thus, R&D investment is influenced by IPOs.
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