Competitive effects of IPOs: evidence from Chinese listing suspensions

Frank Packer and Mark Spiegel

No 888, BIS Working Papers from Bank for International Settlements

Abstract: Theory suggests that initial public offerings (IPOs) can adversely impact listed firms, both directly by increasing intra-industry competition, and indirectly by completing related asset market spaces. However, the endogeneity of individual IPO activity hinders testing these channels. This paper examines listing suspensions in China in a panel specification that accounts for macroeconomic and financial conditions, isolating the firm-level IPO impact. We measure the competitive impact of listing suspensions through the value share of postponed firms in the IPO queue in their industry, and asset-space competition by firms’ historical covariance with a synthetic portfolio of listed firms with the IPO queue industry mix at the time of suspension. Our results support the predicted IPO effects through both channels. We also document heterogeneity in IPO effects. Stronger firms–measured through a variety of proxies–benefit less from the suspension news. These results are robust to a battery of sensitivity tests.

Keywords: initial public offerings; China; competition; asset space (search for similar items in EconPapers)
JEL-codes: G14 G18 G32 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2020-09
New Economics Papers: this item is included in nep-bec and nep-cna
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Competitive Effects of IPOs: Evidence from Chinese Listing Suspensions (2024)
Working Paper: Competitive Effects of IPOS: Evidence from Chinese Listing Suspensions (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:888

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