Listing-Standard Choice and Post-IPO Innovation Capability of STAR Market Firms

China’s STAR Market (Sci-Tech Innovation Board) has innovatively introduced a multi-track listing regime-most notably by allowing loss-making firms to go public-which plays an important role in enabling capital markets to better serve the real economy and to foster innovation-driven development. This study is the first to focus specifically on STAR Market IPO applicants that simultaneously satisfy both the profit criteria and the non-profit criteria, and to examine how their listing-standard choice affects post-IPO innovation capability. Our main findings show that, among firms eligible under both the profit criteria and the non-profit criteria, those that choose to list under the non-profit criteria exhibit stronger post-IPO innovation capability, reflected in higher innovation investment and greater innovation quality. Further analyses suggest that firms listing under the non-profit criteria resemble high-growth reinvestment firms: after going public, they allocate more cash flows to human capital and knowledge capital, rather than distributing earnings through cash dividends. This study not only advances the academic literature on China’s registration-based IPO reform and firms’ IPO behavior, but also provides policy-relevant insights for the Party and the state in fully implementing the registration-based issuance system and in pursuing a distinctive path of financial development with Chinese characteristics.