IPO Intervention and Innovation: Evidence from China

65 Pages Posted: 6 Feb 2017 Last revised: 29 Dec 2018

See all articles by Lin William Cong

Lin William Cong

University of Chicago - Booth School of Business

Sabrina Howell

New York University (NYU) - Leonard N. Stern School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: December 25, 2018

Abstract

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.

Keywords: Listing Suspensions, Innovation, Patent, IPO, China, Entrepreneurship

JEL Classification: L22, L26, G30, G32

Suggested Citation

Cong, Lin and Howell, Sabrina, IPO Intervention and Innovation: Evidence from China (December 25, 2018). Chicago Booth Research Paper No. 146. Available at SSRN: https://ssrn.com/abstract=2911221 or http://dx.doi.org/10.2139/ssrn.2911221

Lin Cong (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Sabrina Howell

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States
212-998-0913 (Phone)

HOME PAGE: http://www.sabrina-howell.com

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