Supply-Chain Spillover Effects of IPOs

36 Pages Posted: 24 Feb 2013 Last revised: 17 Sep 2013

See all articles by Kenji Kutsuna

Kenji Kutsuna

Kobe University - Graduate School of Business Administration

Janet Kiholm Smith

Claremont McKenna College - Robert Day School of Economics and Finance

Richard L. Smith

University of California, Riverside - Anderson Graduate School of Management

Kazuo Yamada

Ritsumeikan University - College of Business Administration

Date Written: September 15, 2013

Abstract

We test whether there are liquidity-related spillovers of IPOs on supply-chain partners (the IPO spillover hypothesis). We find that private suppliers and customers of IPO firms achieve higher growth rates of revenue, cash, and PP&E than do comparison or matched firms. The transmission mechanism differs between suppliers and customers. For suppliers, the expected negative effect on accounts receivable growth is offset by higher revenue growth. Suppliers also gain enhanced access to loans when important customers go public. For customers, liquidity is transmitted through growth in accounts payable. The results enhance our understanding of trade credit as a liquidity transmission mechanism.

Keywords: supply chain, IPO, SME, Trade credit, Working capital

JEL Classification: L14, G30, L26, G31

Suggested Citation

Kutsuna, Kenji and Smith, Janet Kiholm and Smith, Richard L. and Yamada, Kazuo, Supply-Chain Spillover Effects of IPOs (September 15, 2013). Available at SSRN: https://ssrn.com/abstract=2223418 or http://dx.doi.org/10.2139/ssrn.2223418

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

Janet Kiholm Smith (Contact Author)

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

500 E. Ninth St.
Claremont, CA 91711-6420
United States
909-607-3276 (Phone)

Richard L. Smith

University of California, Riverside - Anderson Graduate School of Management ( email )

Riverside, CA 92521
United States
951-827-3554 (Phone)

HOME PAGE: http://www.agsm.ucr.edu/

Kazuo Yamada

Ritsumeikan University - College of Business Administration

2-150 Iwakura
Ibaraki, Osaka 5678570
Japan

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