The competitive effects of IPOs on industry rivals

Research output: Contribution to journalArticlepeer-review


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 languageEnglish (US)
Pages (from-to)86-106
Number of pages21
JournalReview of Financial Economics
Issue number1
StatePublished - Jan 2023

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics


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