IPO has a spillover effect, that is, IPO promotes the initial company and at the same time has a competitive impact on the incumbent company. Recently, domestic and foreign scholars have begun to pay attention to the impact of IPO spillovers, and there is still a lack of evidence of micro-spillover paths. This article finds that the IPO shock prompts the incumbent companies to improve the level of executive incentives in terms of the effectiveness of the compensation contract, the pressure of executive resignation, and equity incentives. After further distinguishing the nature of the equity of the incumbent company, it is found that only the private incumbent company has made the above improvements. Finally, I also examine the economic results of IPO overflow and find that the value of state-owned incumbent companies is negatively affected by the IPO, while the value of private incumbent companies is not affected by the IPO. The results of this article mean that our country’s IPO has an external governance effect, which stimulates the vitality of the private economy, and the market-based mechanism of private enterprises’ incentives for executives can be used as a reference for the market-based compensation reform of state-owned enterprises. This article expands the literature on IPO spillover effects and provides new ideas for our country to improve the efficiency of financial services in the real economy.