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IPO Boom, Neighbour's Gloom: The Hidden Costs of IPOs on Local Private SMEs

Hui Lin et al.

European Financial Management2026https://doi.org/10.1111/eufm.70048article
AJG 3ABDC A
Weight
0.50

Abstract

Using IPO suspensions unexpectedly adopted by Chinese regulators, we examine the impact of IPO activities on the performance of local private SMEs. SMEs in regions affected by IPO activities experience reduced ROA compared to those in unaffected regions, indicating a grabbing effect of local IPO activities. Channel tests reveal that IPO firms grab customers, financial capital, and labour from local SMEs. This effect is stronger when SMEs rely heavily on financial or human capital, when IPO firms hold stronger relative power, and when competition is intense. Our findings remind regulators of the unexpected negative externalities of local IPO activities.

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https://doi.org/https://doi.org/10.1111/eufm.70048

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@article{hui2026,
  title        = {{IPO Boom, Neighbour's Gloom: The Hidden Costs of IPOs on Local Private SMEs}},
  author       = {Hui Lin et al.},
  journal      = {European Financial Management},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1111/eufm.70048},
}

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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