شناورسازی بازار سهام شرکت ها: تأثیر بر سیاست های موجودی

In this article, we argue that firms that are floated on the stock market are subject to close scrutiny by financial markets, which hinder them from implementing the type of empire-building overinvestment policies that may generate inventory accumulation (the signaling role of inventories). Also, listed firms have more resource availability to finance their investment projects and do not need to use inventories as a tool for dealing with their liquidity requirements (the liquidity role). Taking into account both these roles—signaling and liquidity—our main hypothesis is that after a firm is listed on the stock market, there is a decline in its inventory level as well as in its inventory variability, especially in those firms with larger liquidity needs (i.e., small firms and/or firms with financial difficulties). We further argue that the reductions in inventories will be larger for equity issues than for debt issues. Using a sample of US manufacturing firms for the period 1994–2004, we find evidence that conforms to our theoretical predictions, suggesting a natural stabilizing mechanism that may smooth the economic cycle.

There are different reasons that justify inventory investments. Focusing on the demand side, firms accumulate inventories as a buffer mechanism for attending unexpected demand and avoid stock outs. Under a supply-side perspective, inventories have different roles: They are indicators of operational mismanagement (Krautter, 1999), of future growth expectations (Lai, 2006), or credible signals that the firm is willing to compete fiercely in the future because it has enough slack to sell goods at a lower future price—signaling role—( Rotemberg and Saloner, 1989). But also, inventories allow companies to obtain liquidity in the short term—liquidity role—( Guariglia, 2000). For example, firms can obtain funds in case of a liquidity shock like an increase in lending rates by selling inventories at a price that is slightly lower than market value, for elastic-demand goods. In this way, inventories may be used as a substitute mechanism for financial instruments. In this paper, we advance in this direction and we study the effect that firms’ initial public offerings (IPOs) have on their inventory policies. To the best of our knowledge, this is an unexplored topic. The literature has mainly focused on the effect of an IPO in the overall firm's investment, ignoring the specificities of inventories. We believe that this is a relevant question to study, given the increased number of firms that float on the stock market, especially during expansive periods (Ritter and Welch, 2002). This, in turn, may affect inventory investment and, in the end, the overall economic cycle. Remarkably, inventories are responsible for up to 87% of the total peak-to-trough movement in GNP (Blinder and Maccini, 1991). The main conclusion of this paper is that there is a reduction in the inventory level after an IPO, suggesting a stabilizing mechanism that may smooth the overall economic cycle, since IPOs are pro-cyclical phenomena. Different effects are at work when financing issues and inventory investments are associated. First, inventories have a clear signaling role (Lai, 2006). According to different authors (Krautter, 1999; Lai, 2006), inventory accumulation is a signal of mismanagement. This means that those firms that are weakly monitored tend to accumulate more inventories. Tribó (2007) showed that the presence of specialists in monitoring, such as banks, reduces inventory levels as well as inventory variability. Under this view, a discount price should be observed in those firms that accumulate a large amount of inventories (Lai, 2006). Notably, financial markets are a powerful controlling mechanism and, thus, may preclude listed firms from accumulating a disproportionate amount of inventories and change them abruptly. Second, after an IPO, there is a reduction in the cost of capital, which facilitates inventory investment (Lai, 2005). However, in the opposite direction, listed firms are less liquidity constrained and eventual liquidity shocks have lower effects on inventories (Guariglia, 2000), given that firms may use financial instruments to smooth these shocks. In this line, Kashyap et al. (1994) showed that liquidity measures are significant in explaining the inventory variation of firms that have difficulties in issuing bonds (without bond rating) but liquidity is not significant for explaining inventory variation for those firms that can issue bonds easily (with bond rating). Finally, another strand of the literature connects inventories with overinvestment practices that are implemented when a firm has a specific ownership structure. Gomes and Novaes (2005) showed that in more diluted ownership structures (i.e., when there is a large amount of blockholders), overinvestment is less likely. This is so because the higher the number of shareholders, the more likely to have conflicting views on the type of investments to undertake. This prevents overinvestment actions like those that lead to intensive inventory accumulation. According to this view, ownership dilution, which is a common feature after an IPO, should hinder inventory accumulation. Considering the foregoing arguments, we expect that, after an IPO, a firm should lower its inventory levels. This is the main claim of the paper and is consistent with the findings of Chen et al. (2005): a 2% inventory reduction per year in the US between 1981 and 2000. Higher number of firms listed on the stock market during this period,2 jointly with the improvements in operational technology explaining the great moderation phenomenon in the US ( Blanchard and Simon, 2000), will generate reductions in inventory level. We address three extensions in this paper. First, we distinguish between final-good and raw-material inventories and hypothesize that inventory reduction in recently listed firms should be more pronounced for raw-material inventories. We argue that these are liquid-type inventories (less specific) and it is easier to sell them in the factor market. Hence, after an IPO, these more liquid inventories that a firm had relied on to raise liquidity will be the first ones to be substituted by financial instruments as liquidity-provider mechanisms. Second, we analyze different companies’ characteristics and expect that firms with large liquidity needs or poorly monitored (i.e., small firms and/or with liquidity constraints) will benefit more from being listed on the stock market and their inventory reduction should be more pronounced. Last, looking beyond a firm's flotation, we study the effect of subsequent share issues by listed firms on inventory policy. We expect successive reductions in inventory levels, but on a smaller scale compared with the corresponding after the IPO. This logic also applies to debt issues, where we expect even lower effects. We test these theoretical contentions using a panel data sample of US manufacturing firms obtained from COMPUSTAT database for the period 1994–2004. Our results fully confirm our theory. The remainder of the paper is organized as follows. Section 2 develops the theoretical underpinnings and presents the hypotheses to be tested. In Section 3, the empirical analysis is carried out. The paper concludes with some final remarks.

This paper shows the influence that being listed in the stock market has on a firm's inventory policy. After an IPO, firms accumulate fewer inventories and reduce their inventory variability not only in the following period, but more than one period ahead. Moreover, we distinguish between raw-material inventories and final-good ones and find that the reduction in inventories after an IPO is more pronounced for the former. Regarding the type of firms, inventory reduction is particularly evident for firms with financial difficulties. We interpret this as evidence suggesting that for these types of firms, the capital raised through the stock market is particularly important and makes inventory accumulation a less relevant tool for sending informative signals on future prospects and marginally so for preventing liquidity shocks. A second type of results compares the inventory policy when a firm issues debt instead of equity. Notably, the reducing effects on the inventory levels are larger for the equity issue than for debt issue. These results may be explained by the superior provision of current and future liquidity and the larger control of managers that is achieved after an equity issue. Generally, shareholders have larger monitoring incentives to prevent managerial misbehaviour and inventory accumulation because, unlike debtholders, they have junior rights over the cash generated by projects. We show the above results making use of a database of US manufacturing firms for the period 1994–2004. Remarkably, our results describe a natural stabilizing mechanism that may smooth the economic cycle. In the expansive periods, a significant proportion of firms are listed on the stock market which, according to our results, should generate a decrease in the inventory investment and in the last stage in the production. Conversely, in recessive periods, there are a limited number of firms that are sold in financial markets (Ritter and Welch, 2002). This eliminates one of the factors that may generate significant disinvestments which, in turn, may deepen the aggregate contraction in production. Taking a global perspective, along all the economic cycle, the effect described reduces the overinvestment during expansion periods and the underinvestment in recessions. We think the effect that we have described may be relevant, given that that in the US, the proportion of IPOs as a percentage of the overall market value has increased from less than 3% in 1990, to a peak of 13% in 2000, before the burst of the bubble. After that, the level stabilized around 7% (Rousseau, 2006). This means that the relative weight of the new firms in the overall economy has increased steadily and that the inventory policies followed by these firms may be a relevant variable to consider in explaining fluctuations in the economic cycle. The investigation of this issue in greater depth is an avenue for future research.