Seminar: The curious case of the disappearing IPOs: The impact of Chinese import competition

Since the start of the millennium, the US has witnessed a dramatic drop in IPO activity. This paper documents the role Chinese import competition has played in suppressing IPO activity among US manufacturing firms. We show that US manufacturing firms have reacted to China’s expansion in the period 1992-2007 by not going public, resulting in a 21.1% drop in the value of IPOs and a 22.8% drop in the number of IPOs. We demonstrate this drop in IPO activity is not the result of a substitution of equity for debt financing, and establish that the performance of firms that have nevertheless gone public is worse in those industries that are faced with the most intense import competition from China.