Initial Public Offerings and the Local Economy

46 Pages Posted: 14 Sep 2017 Last revised: 27 Jul 2022

See all articles by Jess Cornaggia

Jess Cornaggia

Pennsylvania State University - Department of Finance

Matthew Gustafson

Pennsylvania State University - Smeal College of Business

Jason D. Kotter

Brigham Young University - Department of Finance

Kevin Pisciotta

University of Kansas - School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: July 25, 2022

Abstract

We test the effect of going public on economic growth in the areas surrounding IPO firms. We focus on IPO-filing firms, thus ensuring that both treatment and control firms are at similar life cycle stages. We then use post-filing stock market fluctuations as an instrument for IPO completion and show that counties hosting large companies that go public experience reduced growth in employment, establishments, and population. These large negative effects suggest substantial spillovers on location and hiring decisions of other businesses in close geographic proximity. Overall, our results indicate that macroeconomic gains from IPOs trade off against disruptions in local agglomeration economies where public firms originate.

Keywords: IPO, Economic Growth

JEL Classification: G32, J21, O47, R11

Suggested Citation

Cornaggia, Jess and Gustafson, Matthew and Kotter, Jason D. and Pisciotta, Kevin, Initial Public Offerings and the Local Economy (July 25, 2022). Available at SSRN: https://ssrn.com/abstract=3036176 or http://dx.doi.org/10.2139/ssrn.3036176

Jess Cornaggia (Contact Author)

Pennsylvania State University - Department of Finance ( email )

University Park, PA 16802
United States

HOME PAGE: http://https://directory.smeal.psu.edu/jnc29

Matthew Gustafson

Pennsylvania State University - Smeal College of Business ( email )

East Park Avenue
University Park, PA 16802
United States

Jason D. Kotter

Brigham Young University - Department of Finance ( email )

United States

Kevin Pisciotta

University of Kansas - School of Business ( email )

Capital Federal Hall
1654 Naismith Dr
Lawrence, KS 66045
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
537
Abstract Views
2,878
rank
72,789
PlumX Metrics