The Role of High-Skilled Foreign Accounting Labor in Shaping U.S. Startup Outcomes

Abstract

We investigate the impact of high-skilled foreign accounting workers on U.S. startup firms. Using the H-1B visa lottery setting, we find that startups randomly awarded access to hire high-skilled foreign accounting workers are more likely to secure funding and successfully exit the private market. IPO outcomes are more likely when startups can hire foreign workers with higher salaries and executive titles, and in tighter local labor markets. Consistent with these workers aiding market participants, we find that IPO startups demand high-skilled foreign accounting workers at a higher rate during their prospectus years. Additionally, IPO startups have lower analyst forecast errors and dispersion, and are less likely to misstate their financial statements. Collectively, our findings indicate that H-1B accounting workers help improve startup outcomes. As the accounting profession struggles to find workers, we provide evidence of how a source of talent serves an economically important sector of the U.S. economy.

Keywords: H-1B Lottery, Foreign Labor, Startup Firms, Political Economy

JEL Classification: J15, J61, K37, M41, M48