IPOs, Human Capital, and Labor Reallocation

37 Pages Posted: 20 Nov 2015 Last revised: 12 Jul 2019

See all articles by Tania Babina

Tania Babina

Columbia Business School - Finance and Economics

Paige Ouimet

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

Rebecca Zarutskie

Federal Reserve Board

Multiple version iconThere are 3 versions of this paper

Date Written: July 1, 2019

Abstract

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

Babina, Tania and Ouimet, Paige and Zarutskie, Rebecca, IPOs, Human Capital, and Labor Reallocation (July 1, 2019). Available at SSRN: https://ssrn.com/abstract=2692845 or http://dx.doi.org/10.2139/ssrn.2692845

Tania Babina (Contact Author)

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

Paige Ouimet

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

McColl Building
Chapel Hill, NC 27599-3490
United States

Rebecca Zarutskie

Federal Reserve Board ( email )

20th Street and C Streets NW
Mailstop 155-B
Washington, DC 20551
United States
202-452-5292 (Phone)

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