Browsing by Author "Cangi, Riyesh Ashvine"
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- The success of IPOs on firm competitors : evidence from the U.S. in the tech sectorPublication . Cangi, Riyesh Ashvine; Cerqueiro, GeraldoThis study investigates the impact of Initial Public Offerings (IPOs) on the stock performance of public traded competing firms in the U.S. technology sector. Using data from 1975 to 2023, it explores how IPO announcements affect (cumulative) abnormal returns (AR and CAR) and cumulative total returns (CTR) of industry incumbents. Event studies and cross-sectional regression analysis indicate a statistically significant negative impact on competitors’ firm value, particularly around the IPO announcement and completion dates. Larger IPO firms exacerbate this effect, signaling competitive threats through higher financial resources and growth potential, which is particularly detrimental to incumbents with higher leverage due to their limited financial flexibility. Robustness tests, including alternative event windows and risk models such as the Fama-French Three-Factor Model, confirm these findings. Results suggest that IPOs intensify market concerns about incumbents’ profitability and market share while occasionally offering positive externalities in scenarios of increased industry visibility. This study contributes to understanding the strategic implications of IPOs and highlights avenues for future research in diverse industries and markets.