Listing Delays and Innovation: Evidence from Chinese IPOs
68 Pages Posted: 6 Feb 2017 Last revised: 30 Apr 2018
Date Written: April 25, 2018
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: Suggested Citation