Historical research on initial public offerings (IPOs) presents strong evidence of underpricing. This study investigates if there is a relationship between underpricing of IPOs and pre-IPO research and development (R&D) activities within a company. According to the literature, R&D activities have characteristics of information asymmetry and uncertainty, which can increase underpricing. This study’s sample consists of 231 Swedish companies listed on Nasdaq Stockholm and Nasdaq First North between January 2010 and December 2020. Sweden has a strong association with innovation activities such as R&D, and the country’s IPO market has snowballed in recent years, making it a suitable context for the study. To investigate the relationship between underpricing and R&D activities, the study uses an OLS regression. The findings indicate that R&D positively affects underpricing, which is in line with previous studies on other markets. In addition, the study finds evidence of Firm Size, Offer Size, Shares Offered, VCPE backed, and Firm Leverage related to underpricing.

Corporate taxation is a very politicized topic, and policymakers have different perspectives on what level of corporate tax rate yields the optimal outcome for research and innovation activity. The argument is divided where one side believes that corporate taxation and R&D activity has a negative relationship, which implies that a decrease in corporate taxation yields a better outcome for firms’ R&D activity. Whilst the other side believes that there exists a positive relationship, implying that the prevailing strategy is to increase corporate taxes to further encourage R&D activity. Therefore, the inherent purpose of this study focuses on the effect that corporate taxation has on the U.S corporate environment, whilst researching to understand the two polarized perspectives on corporate taxation and discover which perspective appears more prominent. To succeed in this regard, this study extracts internal financial information from firms located in the U.S states, by comparing the corporate tax change that the Trump administration implemented in 2018. Enabling this research study to compare firms’ R&D expenditure during the pre-tax reform (2017) with the post-tax reform (2018), indicating a firm’s differences in R&D expenditure. The difference-in-difference method was used with a total sample size of 71 firms, which uses a control group and a treatment group to negate macro-environmental disruptions to indicate the accurate effects of the tax policy change. The results state that companies that experienced a reduction in corporate taxes raised their R&D expenditure, approximately by 11.60%. This showed that there was a very large increase in R&D activity when corporate taxation was significantly lowered, which would support the literature’s findings that suggested the existence of a negative relationship. However, the research yielded a result that would indicate that the 11.60% increase was not a statistically significant result and that further studies need to be conducted.