IP32 G2 Policy Uncertainty and Innovation.pptx

SMU AY 2024/2025 - COR1306 Individual Assignment

1. COR1306 Individual Presentation (G2) 23 September 2024

2. Presentation Agenda Introduction of Paper Concluding Remarks Presentation of Key Findings Offering Our Policy Recommendations

3. Introduction Key Findings Recommendations Conclusion Executive Summary of Paper Title & Author(s) Purpose Policy Uncertainty and Innovation: Evidence from IPO Interventions in China (2018) Examines how regulatory uncertainty regarding access to capital affects corporate innovation. Conclusion P redictable and well-functioning IPO markets are important for value creation . Key Issue Occasional suspension of IPOs by Chinese government exposes firms which are already approved to IPO to indeterminate listing delays.  Authors: Lin William Cong and Sabrina T. Howell 

4. Introduction Key Findings Recommendations Conclusion Presentation of Key Findings Disruption of IPO process leads to loss of corporate innovation Preparation Application Application Listing Approval Firm is restructured into a qualified stock share limited company Firms submit their application to CSRC and await approval Committee verifies past financial health of firm repeatedly Firm may apply to list at one of the domestic exchanges Disruption

5. Introduction Key Findings Recommendations Conclusion Presentation of Key Findings Key consequences behind disruption to IPO process Impact of IPO Disruption 02 Creates Policy Uncertainty 01 Creates Capital Constraint W hy policy uncertainty discourage innovation H ow policy uncertainty discourage innovation Impact on Corporate Decisions Lower Risk Appetite of Managers Investment in innovations is riskier, imperfectly contractible, has long time horizons, and has a cumulative dimension than tangible assets Induces precautionary delays of investment  

6. Introduction Key Findings Recommendations Conclusion Offering Our Policy Recommendations Systematic reforms of IPO process increases policy certainty and investments Adopt a registration based disclosure oriented listing process Increased transparency and predictability of IPO markets will boost China’s innovation ecosystem Publish Multi Year Regulatory Roadmaps Release of upcoming regulatory IPO reviews provides a more stable market outlook Create IPO Scheduling Windows Managing the flow of new market entrants promotes price stability, preventing sudden IPO suspensions

7. Introduction Key Findings Recommendations Conclusion Concluding Remarks Reforms of IPO process is vital to promote regulatory and economic stability R educes innovation with economically significant magnitudes. Innovation investments are cumulative Persists for several years Drives corporate innovation Pivot from export and infrastructure-led growth towards high-tech industries and consumption Well-functioning IPO markets drives economic transformation IPO suspensions have a lasting negative impact Corporate innovations drive continuous growth R educes innovation with economically significant magnitudes Persists for several years Innovation investments are cumulative Present investments sets the stage for positive NPV investment opportunities in the future.   Drives corporate innovation Pivot from export and infrastructure-led growth towards high-tech industries and consumption

8. Introduction Key Findings Recommendations Conclusion R educes innovation with economically significant magnitudes. Innovation investments are cumulative Present investments sets the stage for positive NPV investment opportunities in the future.   Persists for several years Any Questions?