 Lost in excess capital: Labor market consequences of IPO oversubscription in ChinaRuitao Li, Yanchun Xia, Taisen He and Xiaobing Peng Pacific-Basin Finance Journal, 2025, vol. 93, issue C Abstract: Using a sample of initial public offerings (IPOs) of firms listed on Chinas capital market between 2009 and 2022, this study examines the impact of IPO oversubscription on corporate employment decisions. We document that IPO oversubscription is associated with a reduction in employment. Mediation analysis shows that companies with oversubscribed IPOs are more inclined to use the funds to engage in corporate financialization practices, which in turn inhibits employment growth. Cross-sectional tests suggest that the negative effects of IPO oversubscription on corporate employment are more pronounced for firms with non-state ownership, high levels of tunneling by controlling shareholders, and heightened industry competition. Further analysis shows that IPO oversubscription significantly reduces the number of employees across all education levels. Moreover, IPO oversubscription negatively affects firms' market valuation. Collectively, our findings indicate that IPO oversubscription advances corporate financialization at the expense of employment. Keywords: IPO oversubscription; Corporate employment; Financialization (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:93:y:2025:i:c:s0927538x25002367 DOI: 10.1016/j.pacfin.2025.102899 Access Statistics for this article Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee More articles in Pacific-Basin Finance Journal from Elsevier |
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