Access to Public Capital Markets and Employment Growth
74 Pages Posted: 20 Nov 2012 Last revised: 17 May 2021
Date Written: August 7, 2019
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: Keywords: Employment growth, Human capital, IPOs, Financial constraints, Acquisitions
JEL Classification: G32, G34
Suggested Citation: Suggested Citation