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Supply-chain spillover effects of IPOs

Kenji Kutsuna, Janet Smith (), Richard Smith () and Kazuo Yamada

Journal of Banking & Finance, 2016, vol. 64, issue C, 150-168

Abstract: We use the IPOs of supply-chain partners as precipitating events and test for positive spillovers on private firms (the “IPO spillover hypothesis”). A trading partner’s IPO may benefit its suppliers through increased demand and its customers by reducing an input-related growth constraint. A newly public firm may also transmit additional liquidity to trading partners through trade credit practices. Using Japanese data on important relationships between IPO firms and their private suppliers and customers, we find that suppliers and customers experience significantly higher rates of growth in revenue, cash balances, and PP&E than do other private firms. The paper appears to be the first to document real and financial effects of positive liquidity shocks on supply-chain partners.

Keywords: Supply-chain relationships; IPO; SME; Trade credit (search for similar items in EconPapers)
JEL-codes: L14 G30 L26 G31 (search for similar items in EconPapers)
Date: 2016
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