Abstract
I study the impact of initial public offerings (IPOs) on industry rival performance. Instrumenting for IPO completion with post-IPO filing NASDAQ returns, I find no impact of IPOs on average rival sales growth, return on sales (ROS), or Tobin’s q after 3 years. However, post-IPO rival performance varies with rival financial constraints. Relative to peers, rivals with low cash or high leverage exhibit lower sales growth, ROS, and q values, accompanied by lower capital expenditures and employment growth. I provide causal evidence of the competitive impact of IPOs and highlight the competitive cost of financial constraints following industry IPO activity.
Original language | American English |
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Pages (from-to) | 86-106 |
Number of pages | 21 |
Journal | Review of Financial Economics |
Volume | 41 |
Issue number | 1 |
DOIs | |
State | Published - Jan 2023 |
ASJC Scopus subject areas
- Finance
- Economics and Econometrics