IPOs, Human Capital, and Labor Reallocation

46 Pages Posted: 20 Nov 2015 Last revised: 8 Jun 2020

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

Board of Governors of the Federal Reserve System

Multiple version iconThere are 3 versions of this paper

Date Written: June 1, 2020

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 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

Babina, Tania and Ouimet, Paige and Zarutskie, Rebecca, IPOs, Human Capital, and Labor Reallocation (June 1, 2020). 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 )

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New York, NY 10027
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Paige Ouimet

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

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Chapel Hill, NC 27599-3490
United States

Rebecca Zarutskie

Board of Governors of the Federal Reserve System ( email )

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Washington, DC 20551
United States
202-452-5292 (Phone)

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