Access to public capital markets and employment growth

Alexander Borisov, Andrew Ellul and Merih Sevilir

Journal of Financial Economics, 2021, vol. 141, issue 3, 896-918

Abstract: This paper examines the effect of going public on firm-level employment. To establish a causal effect, we employ a novel data set of private firms to investigate employment growth in IPO firms relative to a group of firms that file for an IPO but subsequently withdraw their offering. We find that employment increases significantly after going public, and the increase is more pronounced in industries with requirements for highly skilled labor and greater dependence on external finance. Improved ability to undertake acquisitions and a strategic shift toward commercialization, rather than agency problems, explain employment growth. Overall, these results highlight the importance of going public for firms’ employment policies.

Keywords: Employment growth; Human capital; IPOs; Financial constraints; Acquisitions (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:141:y:2021:i:3:p:896-918

DOI: 10.1016/j.jfineco.2021.05.036

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