Robin Hood or not: IPO overfunding and trade credit

ABSTRACT

This article studies the role of initial public offering (IPO) overfunding in the reallocation of resources from the view of trade credit. The results show that, in general, the degree of liquidity supplement from IPO overfunding is positively correlated with the trade credit provision. Trade credit acts as Robin Hood to help the reallocation of direct financing resources. In addition, this effect is more pronounced for companies with strong product-market power, or when economic uncertainty policy is higher.

KEYWORDS:

• IPO overfunding
• trade credit
• product market power
• economic policy uncertainty

JEL CLASSIFICATION:

• G32
• E50
• G10

View correction statement:

Correction Notice

Acknowledgments

Lu Zhang thanks the support by the National Natural Science Foundation of China (71802011), the Project for Humanities and Social Science Research of Ministry of Education of China (18YJC630244).

Huijuan Wang thanks the support by the National Natural Science Foundation of China (71702161), and the Zhejiang University of Finance and Economics Research and Innovation Team.

The data that support the findings of this study are available from the corresponding author, Huijuan Wang ([email protected]), upon reasonable request.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [71802011,71702161]; Project for Humanities and Social Science Research of Ministry of Education of China [18YJC630244]; Zhejiang University of Finance and Economics Research and Innovation Team.