Initial Public Offerings and the Local Economy

Cornaggia, Jess; Gustafson, Matthew; Kotter, Jason D.; Pisciotta, Kevin

doi:10.2139/ssrn.4121291

Cited by 3 publications

(2 citation statements)

References 43 publications

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“…The answers to these questions thus shed light on how the financial markets for IPO shares and mortgages affect housing markets. Moreover, any positive effect that IPOs have on local house prices could add to the concern that the clustering of start‐ups increases the cost of living in those locations (e.g., Butler et al., 2019; Cornaggia et al., 2020).…”

Section: Introductionmentioning

confidence: 99%

Cash to spend: IPO wealth and house prices

Hartman‐Glaser

Thibodeau

Yoshida

2022

Real Estate Economics

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and UTS Business School for their valuable comments and suggestions. We thank the UCLA Ziman Center for Real Estate's Rosalinde and Arthur Gilbert Program in Real Estate, Finance and Urban Economics and the Penn State Institute for Real Estate Studies for generously funding our research. The data are provided by Zillow through the Zillow Transaction and Assessment Dataset (ZTRAX). More information on accessing the data can be found at http://www.zillow.com/ztrax. The results and opinions are our own and do not reflect the position of Zillow Group.

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Section: Introductionmentioning

confidence: 99%

Cash to spend: IPO wealth and house prices

Hartman‐Glaser

Thibodeau

Yoshida

2022

Real Estate Economics

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“…Kutsuna et al (2016) document increases in revenue and investment growth for the private supply chain partners of IPO firms. Cornaggia et al (2021) and Butler et al (2019) estimate the local economic effects of IPO activity. I illustrate the varying impact of IPO activity on rival firms, an important stakeholder group, based on their pre-IPO financial characteristics.…”

Section: Introductionmentioning

confidence: 99%

The competitive effects of IPOs on industry rivals

Henry

2022

Rev Financ Econ

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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.

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The Effects of Public and Private Equity Markets on Firm Behavior

Bernstein

2022

Annu. Rev. Financ. Econ.

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In this article, I review the theoretical and empirical literature on the effects of public and private equity markets on firm behavior, emphasizing the consequences that emerge from disclosure requirements, ownership concentration, and degree of firm standardization. While publicly listed firms benefit from a lower cost of capital, enabling increased focus on commercialization and profitability, they are less suited to pursue long-term risky investments. Privately held firms are better equipped to pursue innovative projects but face a higher cost of capital, which limits their growth. Complementarities between public and private equity markets can mitigate their respective limitations. Innovation in private equity markets supplements commercialization efforts of public firms, and demand for innovation by public firms accelerates entrepreneurial activity in private equity markets. I conclude by discussing directions for future research. Expected final online publication date for the Annual Review of Financial Economics, Volume 13 is November 2022. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

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Initial Public Offerings and the Local Economy

Cited by 3 publications

References 43 publications

Cash to spend: IPO wealth and house prices

Cash to spend: IPO wealth and house prices

The competitive effects of IPOs on industry rivals

The Effects of Public and Private Equity Markets on Firm Behavior

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