Initial Public Offerings and the Local Economy
66 Pages Posted: 14 Sep 2017 Last revised: 14 Mar 2020
Date Written: March 11, 2020
After accounting for endogeneity in the IPO decision, areas hosting large companies that go public experience muted growth in employment, establishments, and population, relative to areas where firms remain private. These effects are most pronounced in low income areas. Establishment-level analyses and tests of IPO-filer acquisition activity reveal that transitioning to public ownership causes firms to geographically diversify their establishments and employee base. These findings are consistent with public ownership reducing a firm’s reliance on local agglomeration economies, to the detriment of the local community.
Keywords: IPO, Economic Growth
JEL Classification: G38, J61, J21, G30, G32
Suggested Citation: Suggested Citation