Financing decisions following negative shocks in the product market: A matrix-completion study of the U.S. pharmaceutical industry
研究美国2022年《通胀削减法案》对制药企业融资决策的影响，发现企业通过增发股权来应对产品市场的负面冲击。
• We study the effect of the U.S. Inflation Reduction Act (IRA) on firm financing. • The analysis is based on Matrix Completion (MC) for causal inference with panel data. • Data express new equity issued pre/post treatment in various regions/macro-industries. • MC results reveal that pharmaceutical firms reacted to the IRA by issuing more equity. • Results are confirmed by placebo tests and by the application of alternative methods. We investigate whether firms adjust their financing policies in response to a negative shock affecting their product market. Focusing on the pharmaceutical industry, we leverage the U.S. Inflation Reduction Act (IRA) of 2022 as an exogenous shock, marking the government's inaugural authority to negotiate drug prices. Using a matrix completion approach, a supervised machine-learning methodology that allows to compare treatment outcomes against predicted counterfactual values in absence of the treatment, our analysis reveals that pharmaceutical firms react to this regulatory intervention by issuing more equity. This finding suggests that firms raise fresh capital to mitigate the adverse impact of IRA on the product market.