Abstract
I study the spillover effects of initial public offerings (IPOs) on local innovation. As the decision to go public is endogenous to local economic conditions, I compare counties in which there is a completed IPO with ones in which an IPO attempt is withdrawn from registration. To address the additional bias introduced by this strategy, I use NASDAQ returns during the book-building period as an instrument for IPO completion. I find that local innovation increases after a firm goes public in a county, compared to counties with a failed IPO. The innovation spillovers are stronger for firms operating in similar technologies as the IPO firms, in counties where IPO establishments constitute a larger portion of the local economy, and in smaller geographies around the IPO establishments. Local innovation in IPO counties goes up mainly through existing firms becoming more innovative and attracting new inventors to the area