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Supply-chain spillover effects of IPOs

Author

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  • Kutsuna, Kenji
  • Smith, Janet Kiholm
  • Smith, Richard
  • Yamada, Kazuo

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.

Suggested Citation

  • Kutsuna, Kenji & Smith, Janet Kiholm & Smith, Richard & Yamada, Kazuo, 2016. "Supply-chain spillover effects of IPOs," Journal of Banking & Finance, Elsevier, vol. 64(C), pages 150-168.
    • Handle: RePEc:eee:jbfina:v:64:y:2016:i:c:p:150-168
    DOI: 10.1016/j.jbankfin.2015.12.003
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    1. Fang Chen & Jian Huang & Jianjun Jia, 2022. "Cash Holdings along the Supply Chain: The Downstream Evidence," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 46(2), pages 452-471, April.
    2. In-Mu Haw & Wenming Wang & Wenlan Zhang & Xu Zhang, 2022. "Capturing the straw in the wind: do short sellers trade on customer information?," Review of Quantitative Finance and Accounting, Springer, vol. 58(4), pages 1363-1394, May.
    3. Xu, Xinhan & Chen, Xiangfeng & Jia, Fu & Brown, Steve & Gong, Yu & Xu, Yifan, 2018. "Supply chain finance: A systematic literature review and bibliometric analysis," International Journal of Production Economics, Elsevier, vol. 204(C), pages 160-173.
    4. Gu, Haoran & Yang, Shenggang & Xu, Zhaoyi & Cheng, Cheng, 2023. "Supply chain finance, green innovation, and productivity: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 78(C).
    5. Luana Zaccaria & Simone Narizzano & Francesco Savino & Antonio Scalia, 2024. "From Public to Internal Capital Markets: The Effects of Affiliated IPOs on Group Firms," Mercati, infrastrutture, sistemi di pagamento (Markets, Infrastructures, Payment Systems) 49, Bank of Italy, Directorate General for Markets and Payment System.
    6. Fatao Wang & Lihui Ding & Hongxin Yu & Yuanjun Zhao, 0. "Big data analytics on enterprise credit risk evaluation of e-Business platform," Information Systems and e-Business Management, Springer, vol. 0, pages 1-40.
    7. Fatao Wang & Lihui Ding & Hongxin Yu & Yuanjun Zhao, 2020. "Big data analytics on enterprise credit risk evaluation of e-Business platform," Information Systems and e-Business Management, Springer, vol. 18(3), pages 311-350, September.
    8. Jia, Fu & Blome, Constantin & Sun, Hui & Yang, Yang & Zhi, Bangdong, 2020. "Towards an integrated conceptual framework of supply chain finance: An information processing perspective," International Journal of Production Economics, Elsevier, vol. 219(C), pages 18-30.
    9. Li, Lidan & Han, Jie & Mo, Shenwei & Yang, Yupeng, 2024. "Tackling competition by reducing emissions: Private firms’ polluting behavior under peer IPOs," International Review of Economics & Finance, Elsevier, vol. 89(PB), pages 232-249.
    10. Feng, Qianbin & Hu, Xiao & Deng, Xinyi & Lu, Jun, 2023. "Anti-corruption campaign and capacity utilization of state-owned enterprises: Evidence from China’s central committee inspection," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 319-346.
    11. Peng, Xuan & Wang, Xiongyuan & Chan, Kam C., 2020. "Does supplier stability matter in initial public offering pricing?," International Journal of Production Economics, Elsevier, vol. 225(C).
    12. Guo, Chenhao & Ke, Yun & Zhang, Jinkang, 2023. "Digital transformation along the supply chain," Pacific-Basin Finance Journal, Elsevier, vol. 80(C).

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    More about this item

    Keywords

    Supply-chain relationships; IPO; SME; Trade credit;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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