Going Public and the Internal Organization of the Firm

70 Pages Posted: 19 May 2022 Last revised: 5 May 2023

See all articles by Daniel Bias

Daniel Bias

Owen Graduate School of Management at Vanderbilt University

Benjamin Lochner

Institute for Employment Research (IAB); University of Erlangen-Nürnberg (FAU)

Stefan Obernberger

Erasmus University Rotterdam - Erasmus School of Economics; Erasmus Research Institute of Management (ERIM)

Merih Sevilir

Indiana University - Kelley School of Business - Department of Finance

Date Written: July 22, 2022

Abstract

We examine how firms adapt their organization when they go public. IPO firms transform into a more hierarchical organization and increase managerial oversight. Organizational functions dedicated to accounting, finance, information technology, and human resources become more prominent. IPO firms turn around a large chunk of their labor force and almost their entire management to adapt their human capital to the new organization. New employees are better educated, but they possess less job- and industry-specific experience than incumbents and employees leaving the firm. The new organization facilitates internal transfers and job promotions. Overall, going public succumbs the firm to a transformation which reduces the firm's dependence on individual employees and efficiently organizes the production process of a public firm.

Keywords: IPOs, Going Public, External Financing, Organizational Economics, Human Resource Management

JEL Classification: G32, G34, M50, D20

Suggested Citation

Bias, Daniel and Lochner, Benjamin and Obernberger, Stefan and Sevilir, Merih, Going Public and the Internal Organization of the Firm (July 22, 2022). Proceedings of the EUROFIDAI-ESSEC Paris December Finance Meeting 2022, Available at SSRN: https://ssrn.com/abstract=4112225 or http://dx.doi.org/10.2139/ssrn.4112225

Daniel Bias

Owen Graduate School of Management at Vanderbilt University ( email )

2301 Vanderbilt Place
Nashville, TN 37240
United States

Benjamin Lochner

Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

University of Erlangen-Nürnberg (FAU) ( email )

Germany

Stefan Obernberger (Contact Author)

Erasmus University Rotterdam - Erasmus School of Economics ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Merih Sevilir

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States

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