IPOs, Human Capital, and Labor Reallocation
37 Pages Posted: 20 Nov 2015 Last revised: 12 Jul 2019
Date Written: July 1, 2019
We examine the human capital of IPO-filing firms and how going public affects their labor force. IPO-filing firms have high average wages and limited industrial diversification. Moreover, we document that a successful IPO increases departures of high-skilled employees to startups and diversification though employment growth in non-core industries. While IPOs do not significantly affect earnings growth of pre-IPO workers, post-IPO hires receive larger earnings increases upon joining. These results are most consistent with agency mechanisms associated with the transition to public ownership. Overall, going public has significant implications for the firms’ overall labor force, the firm, and labor reallocation.
Keywords: IPO, human capital, labor, labor and finance, labor reallocation, entrepreneurship, wages, employment, labor demand, change in firm ownership structure, agency cost, financial constraints
JEL Classification: G32; G34; J21; J23; J24; J31; J33; J60; L25; L26
Suggested Citation: Suggested Citation