IPOs, Human Capital, and Labor Reallocation
51 Pages Posted: 20 Nov 2015 Last revised: 19 Dec 2022
Date Written: November 2022
How does access to public equity markets affect real outcomes? We examine the human capital of IPO-filing firms and how going public affects their labor force. While IPO-filing firms have high average wages and limited industrial diversification, a successful IPO increases departures of high-wage employees to startups and triggers industrial diversification through employment growth in non-core industries. Surprisingly, IPOs do not significantly affect earnings growth of pre-IPO workers. Instead, post-IPO hires receive larger earnings increases upon joining. Overall, going public has a significant effect on a firm's workforce and labor reallocation across firms.
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