Listing Delays and Innovation: Evidence from Chinese IPOs

68 Pages Posted: 6 Feb 2017 Last revised: 30 Apr 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

Date Written: April 25, 2018

Abstract

Regulators have suspended IPOs in China on numerous occasions, exposing firms already approved to IPO to indeterminate listing delay. These disruptions curtail firms’ timely access to risk capital and increase uncertainty. After firms ultimately list, suspension-induced delay substantially reduces their innovation activity, measured using patent quantity and quality. These effects begin during the delay and endure for years after listing, while impacts on other firm outcomes are short-lived. The corporate innovation process, like an individual’s accumulation of human capital, has a cumulative dimension. Interrupting it can be detrimental in the long term, highlighting the importance of well-functioning IPO markets.

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

JEL Classification: L22, L26, G30, G32

Suggested Citation

Cong, Lin and Howell, Sabrina, Listing Delays and Innovation: Evidence from Chinese IPOs (April 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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