IPO Intervention and Innovation: Evidence from China
NBER Working Paper No. 24657
This paper asks whether restricting timely access to public equity markets affects innovation among firms that intend to go public. The Chinese government has suspended IPOs occasionally, exposing firms to indeterminate listing delays, which curtails timely access to equity capital and increases uncertainty. We find that suspension-induced delay substantially reduces innovation, measured using patenting activity. These effects begin during the delay period and endure for multiple years, while impacts on other firm outcomes are short-lived. Our results suggest that corporate innovation is cumulative, and that predictable, well-functioning IPO markets are important for firm value creation through innovation.
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Document Object Identifier (DOI): 10.3386/w24657