IPOs, Human Capital, and Labor Reallocation

51 Pages Posted: 20 Nov 2015 Last revised: 19 Dec 2022

See all articles by Tania Babina

Tania Babina

University of Maryland - Robert H. Smith School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Paige Ouimet

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School; European Corporate Governance Institute (ECGI)

Rebecca Zarutskie

Federal Reserve Banks - Federal Reserve Bank of Dallas

Multiple version iconThere are 3 versions of this paper

Date Written: November 2022

Abstract

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

Babina, Tania and Ouimet, Paige and Zarutskie, Rebecca, IPOs, Human Capital, and Labor Reallocation (November 2022). Available at SSRN: https://ssrn.com/abstract=2692845 or http://dx.doi.org/10.2139/ssrn.2692845

Tania Babina (Contact Author)

University of Maryland - Robert H. Smith School of Business ( email )

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

HOME PAGE: http://taniababina.com

Paige Ouimet

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Rebecca Zarutskie

Federal Reserve Banks - Federal Reserve Bank of Dallas ( email )

2200 North Pearl Street
Dallas, TX 75265
United States

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