Industrial Policy via the IPO Market

Zhiguo He (), Yiming Qian, Xi Sun and Wang Renxuan

No 35889, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies how China uses access to public equity markets as an instrument of industrial policy. We find that policy-favored status, rather than industry Tobin's Q, predicts IPO activity, in contrast to the United States. The effect is economically large: our estimates imply that favored industries had 287% more IPOs and 148% higher IPO proceeds than non-favored industries over 2002 to 2022. We develop a framework to interpret these findings: the government shapes the number of listing opportunities available across industries, while market forces determine which firms obtain these opportunities based on firm fundamentals. Consistent with our framework, policy favor also predicts a valuation premium which persists after listing.

JEL-codes: G14 G18 G24 G32 G38 L52 O25 P16 (search for similar items in EconPapers)
Date: 2026-10
Note: AP CF DEV IO PR
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