Abstract:
Based on private firms’ data, this paper measures the total factor productivity(TFP)from the micro-perspectives. Furthermore, we study the effect of IPO on enterprise’s innovation behaviors and TFP from the perspective of point of institutional incentives. First, the within-firm test finds that TFP declines significantly after IPO. Second, to overcome the life cycle effect, we reselect the sample by propensity score matching and perform the between-firm test. Other things being equal, the long-run TFP of public firm is lower than private firm. Finally, we separate the whole sample into two subsamples based on CEO duality, intellectual rights protection system and inventors’ departure, finding that all three incentives (i.e., managerial incentives, information disclosure incentives and inventors’ incentives) play important roles in the effect of IPO on TFP. Our findings reveal that firms face a complex trade-off between easing access to capital and decreasing productivity during the transition to public equity markets.
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