IPOs, Human Capital, and Labor Reallocation
46 Pages Posted: 20 Nov 2015 Last revised: 8 Jun 2020
Date Written: June 1, 2020
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 success-ful 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 signiﬁcant implications for the workers, the ﬁrm, 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