Spillover Effect of IPOs on the Investment Activity of their Supply Chains

27 Pages Posted: 22 Aug 2011 Last revised: 30 Aug 2011

See all articles by Kazuo Yamada

Kazuo Yamada

Ritsumeikan University - College of Business Administration

Kenji Kutsuna

Kobe University - Graduate School of Business Administration

Date Written: August 30, 2011

Abstract

Using a dataset that enables the identification of the supply chain of small-and medium-sized enterprises (SMEs) in Japan, this paper examines the impact of business partners’ initial public offerings (IPOs) on the growth of investment activity. Empirical evidence suggests that IPOs of business partners facilitate growth in sales, cash and cash equivalents, and accounts receivable. Furthermore, the IPOs of business partners and cash holdings stimulate investment activities, especially when these firms, whose business partners go public, are financially constrained. These results indicate that positive liquidity shock in any firm propagates through the network of firms and stimulates investment activity, especially when these firms are financially constrained.

Keywords: Firm network, Financial constraint, Investment

JEL Classification: D22, G30

Suggested Citation

Yamada, Kazuo and Kutsuna, Kenji, Spillover Effect of IPOs on the Investment Activity of their Supply Chains (August 30, 2011). Available at SSRN: https://ssrn.com/abstract=1914413 or http://dx.doi.org/10.2139/ssrn.1914413

Kazuo Yamada (Contact Author)

Ritsumeikan University - College of Business Administration ( email )

2-150 Iwakura
Ibaraki, Osaka 5678570
Japan

Kenji Kutsuna

Kobe University - Graduate School of Business Administration ( email )

2-1, Rokkodai-cho, Nada-ku
Kobe, 657-8501, 657-8501
Japan

HOME PAGE: http://www.b.kobe-u.ac.jp/en/staff/kutsuna.html

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
77
Abstract Views
834
rank
366,505
PlumX Metrics